As the grocery trade continues to digest the demise of wholesalers DBC and Eskimo, there were further dispatches today from the doom and gloom department.
Insolvencies among UK retailers rose by 15% in the first quarter of 2012 compared to last year. Sixty-nine retailers went under in the first three months of this year, according to Deloitte, up from 60 for the equivalent period in 2011.
To add to the cheer, there was a warning for suppliers in our sector today as well. Financial health specialist Company Watch reckons that as many a quarter of the UK’s biggest food and drinks companies are at risk of insolvency. And that’s based on company accounts a year or more old that don’t fully take into account increased costs and commodity prices.
“Once these factors feed through, we can expect the financial health of the sector to deteriorate further,” said Company Watch’s Nick Hood, “with more manufacturing companies falling into our warning area and becoming vulnerable to insolvency or restructuring.”
It wasn’t surprising to see Premier Foods on the list of companies deemed to be at risk, despite a recent pick-up in the manufacturer’s share price amid speculation that more of its non-core brands might be sold off.
Among the retailers already to go down the road to administration, perhaps the most high-profile was Game - the store closures that resulted potentially having an impact on the games market as a whole.
Ugo also went during that period, its stores subsequently taken over by Poundstretcher. The defunct discounter’s debts were last week revealed to be more than £2.5m, with cash owed to a host of creditors including strongman Geoff Capes and the ad company behind its gaudy yellow fascia. The ad company has itself since gone out of business, still short of the £52,000 it was owed by Ugo - further demonstrating that none of these failure take place in isolation.
No comments yet