More UK retailers struggling to survive

LONDON • The number of British retailers fighting for survival has jumped by about a quarter this year.

Almost 40,000 companies - selling both online and in stores - are currently in "significant financial distress", according to a survey by insolvency firm Begbies Traynor Group.

The figure has risen 24 per cent from this time last year as retailers grapple with the escalating impact of Covid-19. It has climbed 11 per cent since just September.

"This has been one of the toughest years ever" for retailers, said Ms Julie Palmer, a partner at Begbies Traynor, in an e-mail statement. "While many industries have been hit hard, retail - which was already suffering a crisis of confidence - has been shaken to its foundations."

Shops in Britain had only recently reopened from a lockdown when the government ordered non-essential stores in south-east England to shut again on Sunday, in a bid to stem a more infectious mutation of Covid-19.

Enforced closures in the run-up to Christmas - and less than two weeks before the end of the Brexit transition period - could prove fatal for some companies.

This year has already seen the collapse of a number of chains, notably department store operator Debenhams and Sir Philip Green's Arcadia Group. Between them, they employ over 20,000 people.

Both had been struggling for some time, weighed down by costly stores as they tried to compete with online upstarts. Covid-19 only accelerated their demise.

Ms Helen Dickinson, chief executive of industry trade body British Retail Consortium, said: "Faced with the prospect of losing £2 billion (S$3.6 billion) per week in sales for the third time this year, many businesses will be in serious difficulty and many thousands of jobs could be at risk."

Even those that seemed to be faring better are taking a hit.

On Monday, Mr Mike Ashley's Frasers Group, which owns the Sports Direct brand and is in negotiations to save part of the Debenhams business, withdrew a profit forecast made only 10 days earlier.

It said it could no longer commit to a prediction for profit to increase 20 per cent to 30 per cent this year, given a shutdown of many stores during "peak trading and the high likelihood of further rolling lockdowns nationwide over the following months".

Shares of Frasers fell more than 10 per cent on Monday, contributing to a broader sell-off among fashion retail stocks.

Retailers are calling for fresh financial support from the government to help them weather a crisis made worse by the current chaos at British ports - which followed the decision by a number of European Union countries to temporarily close their borders with Britain.

Mr Julian Dunkerton, CEO of apparel brand Superdry, said Britain's town centres face a "bleak" future without help. "The government needs to act urgently," he said, calling for a reduction in the value-added tax shoppers pay on certain goods, among other measures.

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