Going bust as shopping goes out of fashion

Published on Wednesday 30 July 2008 21:08

THE number of UK clothing, fashion and cosmetic retailers going into administration rose by more than a fifth in the first six months of the year as the global credit crunch crimped consumer spending, according to new research.

The number of clothing businesses that filed for administration rose to 40, from 33 during the same period last year, accountancy firm Deloitte said.

Deloitte added: "Fashion is often one of the first sectors to be hit hard as consumers' discretionary spending is tightened and those retailers whose customer offering isn't spot on experience sales slippage."

Several mid-market clothing retailers, such as Ethel Austin, have filed for administration, impacted by lower consumer spending and soaring fuel prices. Struggling retailers also face higher financing costs and banks' increasing aversion to risk, which makes debt restructuring less likely.

Deloitte said the effects of the credit squeeze were spreading through the economy, after initially affecting only global financial institutions. Furniture and household-related retailers are expected to suffer in the months to come, the firm said.

Richard Hyman, strategic adviser to Deloitte, said: "The retailers that are able to react quickly to the market by adapting their offerings to changing customer needs while encumbering as little cost as possible will be able to both survive and achieve business success."