The retail sector accounted for 19% of administrations in 2023 – the highest industry in the UK, according to analysis by law firm Shakespeare Martineau.
A total of 1,641 businesses, 239 of which came from the retail sector, filed for administration last year. This marked a 22% increase compared to 2022, and 91% rise in comparison to 2021.
Retail, construction, hospitality, manufacturing, and real estate were the worst-hit sectors, collectively accounting for 59% of the administrations.
“The significant uptick in the number of companies filing for administration in 2023 underscores the challenges faced by businesses amid changing consumer habits, financial pressures, and geopolitical uncertainties,” said Andy Taylor, partner and head of restructuring at Shakespeare Martineau.
Additional research by Statista showed that 61 ‘medium or large’ retailers in the UK went into administration in 2023, 12 more companies than a year prior.
InternetRetailing reported on several retailers closing for good during the past 12 months. This included:
Fashion chain M&Co fell into administration for the second time in 2023, following a restructuring in 2020 using pre-pack administration.
When it was purchased out of administration in February 2023, the retailer’s 170 stores and almost 2,000 staff were not part of the transaction. Instead, M&Co’s brand and intellectual property were acquired by AK Retail Holdings for an undisclosed sum.
According to a report filed at Companies House, unsecured creditors were owed a total of £40.6mn, which included money owed to suppliers. Administrators Teneo added that the total figure is predicted to be higher due to certain liabilities haven’t being taken into account including “intercompany creditors” and “landlord claims”.
Stationery and gifts retailer Paperchase appointed administrators in January 2023, with supermarket Tesco picking up the intellectual property.
Paperchase was put up for sale just four months after its most recent change of ownership. The chain was taken over in August 2022 by Steve Curtis, an experienced retail investor who has been involved with Tie Rack and Jigsaw.
Following its closure, Tesco announced the relaunch of the Paperchase brand in its stores and online in October 2023. Products, including greetings cards and gift-wrapping materials; party decorations and accessories; notebooks, calendars and diaries; and home accessories, are available in over 250 Tesco stores, as well as being available online in selected areas.
The homeware retailer appointed PwC in August 2023 to lead its administration process after failing to agree on a rescue deal.
Wilko had 400 stores and employed 12,500 staff when it closed, citing weak consumer spending and debts to suppliers.
Discount chain B&M has since agreed to buy 51 Wilko stores. Poundland-owner Pepco agreed to buy up to 71 shops and has hired 962 former Wilko colleagues to join its team following the take over. The brand name ‘Wilko’ and the company’s IP has been purchased by The Range, in a deal understood to be worth £5mn.
As we move into the second month of 2024, many businesses will be hoping for interest rates to come down and for there to be positive market growth. Taylor warns however that “the economic landscape remains unpredictable” and businesses – including retailers – should be proactive.
“It is crucial not to ignore the signs and bury your head in the sand and instead, take a proactive approach to address underlying issues. By doing so, businesses can better navigate the tough trading conditions and increase their chances of survival,” he concludes.
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