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Many more businesses may face closure next year

January 10, 2009 by admin  
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The UK has been overwhelmed with concern over recent weeks, with some of the best known retailers announcing that they are going into administration, having been unable to continue coping with huge debts as the recession, the global credit crunch, and the continuing economic downturn continue. Woolworths, MFI, and Zavvi are just a few of the big names to have made the dreaded announcement, but there could be many more to come according to some industry officials.

In fact, insolvency experts have warned that over the next month alone a further ten or more national companies could find themselves having to make the same announcement, as they find their financial situations increasingly difficult to cope with. Over recent weeks many retailers have been heavily discounting goods in the run up to Christmas in order to try and pull in trade and increase profits, but sadly for many these early Christmas sales have turned into closing down sales.

One insolvency expert said: “Not a lot of them are profitable because of the discounting at a time when they would normally generate all their profits for the year.”

He added: “The problem facing the management of retail chains is whether they can find funding to restock in January, pay their VAT bills and survive through until Christmas starts again next October.”

Officials have also said that January is the best time for administrators to force retailers into administration if they plan to do so, as this is a time when retailers tend to have more cash and less stock. It is thought that whilst suppliers and lenders may have supported the retailers in the run up to Christmas this may no longer be the case once the festive season is over.

Tags: early christmas sales, expert, closure, stock, holidays, insolvency, economic downturn

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