- 23 Apr
Retailageddon - Why Are So Many High Profile Companies In Financial Trouble?
Can anyone explain why so many high profile companies are having financial problems? Is there cause to worry about economic stability?
I first started really paying attention to the spate of emerging problems when Carillion collapsed, the second largest UK construction firm. Watching some of the social media commentators that have an interest in the credit insurance sector. Since then there seem to have been numerous CVAs (Creditors' Voluntary Arrangement), significant losses and proposed restructurings within the restaurant and retail sectors, amongst other.
Retailageddon - CVAs, Losses & Decreased Profits
Since the beginning of 2018 "retailageddon" seems to have sped up. Toys R Us saw their CVA collapse into Administration. Byron Burger, Jamie's Italian and Prezzo have all gone into CVA. Following that, Jamies Italian went into Administration (where an insolvency practitioner is appointed to oversee the running of a company that cannot pay its creditors as they fall due). House of Fraser are apparently using a firm of advisers to draw up a turnaround plan, Debenhams have experienced an 84% plunge in profits and HSS Hire (tool hire company) have experienced huge losses. Carpetright are apparantly also considering a CVA.
I was talking to someone only yesterday that was oblivious to the growing list of high profile companies that are having problems, but they said that in their own small way that had stopped eating out recently, and only ever used these kinds of restaurant chains when they had cheap offers available. However, the problem doesn't just stop at restaurant chains that could be considered luxury spending.
Many of these situations are leading to branches being closed and jobs being lost. This will surely have a negative effect on the economy, more people unemployed and spending less - lower revenues to landlords.
We are told that inflation fell to its lowest level in a year, 2.5% in March 2018 but to the man on the street, if feels like prices are spiralling upwards. Gas and electricity "discounts" seems less available, and prices are due to be hiked up again soon as wholesale prices rise. Petrol seems to be gradually climbing nearer and nearer to the levels where we had petrol blockades by trucking companies not so long ago. The cost of basic groceries seems to push relentlessly onwards and upwards.
GDP (Gross Domestic Product - a measure of how much the UK economy has grown) according to the Office for National Statistics "UK gross domestic product (GDP) in volume terms was estimated to have increased by 0.4% between Quarter 3 (July to Sept) and Quarter 4 (Oct to Dec) 2017; this is a 0.1 percentage point revision down from the preliminary estimate of GDP". Despite this, growth is still expected for the coming year at around 1.6% according to The Guardian (23/04/18).
Sure Brexit fears are always going to be part of the mix, but some degree of growth in the medium terms still seems to be predicted despite this.
What Is Happening?
So what is happening? Is it just austerity causing consumers to cut luxury spending, is this just less well adapted companies being weeded out by economic natural selection, whilst the likes of Amazon capitalise on the greater move towards online purchasing? Or is something more worrying happening?
We are doing our best to protect our clients from the potential fallout from large company failures, but I continue to worry about just how much more we can expect from Retailageddon.
Comments (0 comments)
- 01 Oct
Mitigating The Risks Of Selling To One Major Debtor
When you land a major customer it can provide a huge boost to your business, increasing sales turnover and generating profits. However, there is another side to dealing with a major debtor, and that is the increased risk associated with your trade being concentrated into one customer.In a previous post I covered the risks of selling to a single major customer, often called a "prime debtor". These...
- 23 Sep
You Can't Rely On A Name Like Thomas Cook
Another failure of a well known, long established company proves, yet again, that you can't rely on dealing with a "big name" to ensure that you get paid for services rendered, or products supplied. Sticking to "household names" is no longer enough to ensure that you avoid bad debts.The latest corporate failure, reported by the BBC today, was the holiday company Thomas Cook. After a 178 year...
- 06 Dec
Hospitality And Construction Sectors Top The Insolvency Index
Looking at some figures in Business Money, published from the Creditsafe Insolvency Index, it appears that the hospitality sector (hospitality, hotels, restaurants and bars) tops the insolvency index, followed by the construction sector and then manufacturing. Worrying if you supply those trades with goods or services.Figures from the Office For National Statistics suggest that generally, the...
- 30 Jul
The Risk Of Customer Bad Debts Is Rising
The risk of customer bad debts is rising as there has been an increase in both corporate and personal insolvencies. It is time to protect your business against the risk from customers taking trade credit. Protection against taking customer bad debts is still on offer at present.REQUEST DETAILS OF BAD DEBT PROTECTIONAn article in The Times dated 28th July 2018 reported that personal insolvencies...
- 24 Apr
Factoring For Road Transport Company Cash Flow Problems As Bad Debts Increase
Coincidently, just after posting my article about transportation factoring companies, I saw an article published online by the Motor Transport publication, suggesting that bad debts have risen significantly within the road transport sector.The article sites figures regarding the road transport sector, released by Credit Safe. This statistics show that in the first quarter of 2018, while sales...
- 26 Mar
Protection For Suppliers To UK Retail Chains
If you are a supplier to any of the large retail chains, you may wish to review your requirement for bad protection following a number of recent news reports from the retail sector.More problems have emerged from the sector as the BBC report that Prezzo, the Italian restaurant chain plan to close approximately a third of their retail outlets, as part of a creditors voluntary arrangement...
- 28 Feb
Maplin Electronics & Toys R Us Enter Administration
Two more large company failures on the BBC news this morning - both Maplin Electronics and Toys R Us have entered Administration.Administration is an insolvency process whereby a firm of insolvency practitioners, the Administrators, take over the running of an insolvent business (one that cannot pay its creditors as they fall due), in order to maximise the returns for creditors of the business....
- 30 Jan
Pulse On Protecting Against Carillion Bad Debts
I had an email from Pulse Cashflow Finance, one of our funding panel, that I thought raised a great point about the recent failure of Carillion. Their clients will not be suffering any bad debts.They have included "bad debt protection" for all of their clients, including those operating within the construction sector, meaning that their clients are protected from taking a bad debt.OK, so it was...