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Retail administrations fall 15% in Q3

The number of retailers falling into administration in the third quarter of this year has fallen by 15% compared to the same period last year according to figures released by business advisory firm Deloitte.

GENERAL MERCHANDISE

Retail administrations fall 15% in Q3

In the third quarter of 2012, there were 28 retail administrations whereas in the same period in 2011 there were 33.

Lee Manning, restructuring partner at Deloitte, explained: "The decline in the number of retailers falling into administration is positive news. With some notable exceptions, the trend in recent months has been for fewer household names to suffer financial distress.  As the year has gone on, low inflation has eased the pressure on consumers, particularly in the non-discretionary categories.

"Whilst this has yet to translate in stronger spending on discretionary items, there is cautious optimism for next year when wage growth is poised to outstrip inflation, providing a boost to spending power."

However, Deloitte said that the retail sector was still fragile despite an easing of pressure in the quarter. Manning added: "The real test will come in January once the busy Christmas trading period is over.  Forecasts for the festive period are mixed. The challenge will be for retailers not to discount too quickly or too deeply to ensure they generate sales at acceptable margins in order to provide a stable platform for trading into the first quarter of 2013."

Overall, the third quarter of 2012 saw a total of 395 companies falling into administration compared with 524 in Q3 2011 - a decline of 25%. 

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