Bankruptcies on the rise as crunch bites

Published on Monday 1 December 2008 09:06

MORE than 1000 businesses have collapsed in the last year and experts predict more will follow due to poor Christmas trading.

Business research company Experian has recorded a 17 percent increase – totalling 1087 companies – in the number of non-food retailers going to the wall in the last 12 months.

The latest victims include variety retailer Woolworths and home improvements firm MFI.

Experian chief economist Matthew Sherwood said there was "little relief in sight" for other troubled retailers with UK shoppers "watching their pennies" in the run up to Christmas.

He added: "This downturn has much further to run."

John Lewis announced like-for-like sales were down for the ninth week in a row, and recent sales figures show a 13 per cent slump on the same period last year.

Patrick Lewis, John Lewis's director of retail operations, said the 2.5 per cent cut in VAT would provide some relief for the retailer in the months ahead.

He said: "Every little reduction helps, but with the current state of the market this will not have a dramatic effect."

Stephen Robertson, director of the British Retail Consortium, said that the cut would have "a very, very modest effect" on sales. He added: "It's not enough to kick-start the economy."

The downturn is not just affecting non-food retailers, with supermarket giants Tesco set to post its worst UK sales figures since the early 1990s.

An analyst's poll ahead of Tesco's third quarter report tomorrow predicts a UK like-for-like sales growth of just 1.9 per cent, excluding fuel, representing its poorest performance since 1992-93.

The number of food stores that failed rose by almost nine per cent, taking the total number of failed food retailers in the year to 173.

Mr Sherwood's fears of a prolonged Christmas slump were supported by his firm's November Retail Footfall Index, which recorded a 0.9 per cent slump on the same month last year.

Scotland has been particularly badly hit, with the number of shoppers down five per cent on November 2007.

Much of the poor performance and footfall in stores north of the border has been blamed on the crisis in Scottish banking.