British retailers are grappling with mounting financial pressures as the sector witnessed a stark 25 per cent increase in businesses showing critical distress during the final quarter of 2024. Data from insolvency specialists Begbies Traynor reveals that 2,124 retailers exhibited serious financial difficulties in Q4.
Boxing Day trading proved particularly disappointing, with high street footfall declining by approximately 9 per cent compared to the previous year. Whilst December 27 showed modest improvement with an 8 per cent year-on-year increase in shoppers, figures remained 17.4 per cent below pre-pandemic levels according to MRI Software.
General retailers, including mail-order businesses and household goods vendors, bore the brunt of the downturn. The subsector experienced a troubling 29 per cent rise in companies displaying critical financial distress, reaching 1,448 businesses. The food and drug retail segment also demonstrated significant vulnerability, with distressed businesses increasing by 17 per cent to 694.
Julie Palmer, partner at Begbies Traynor, highlighted the sector’s struggles with operational costs and diminished consumer spending. The November retail performance fell short of expectations, with sales volumes increasing by merely 0.2 per cent month-on-month, despite extensive Black Friday promotions.
Hedge funds have begun positioning themselves ahead of post-Christmas trading updates, targeting companies such as Ocado, Kingfisher and Burberry. The outlook for 2025 remains uncertain, with mounting challenges including wage inflation, fierce online competition from emerging players like Temu and Shein, and persistent consumer hesitancy.
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