Company Watch, which rates the financial health of businesses worldwide using an “H-Score” system, said a recent flurry of failures, including lingerie specialist La Senza and D2 Jeans, suggested that many “vulnerable” retailers were “fighting hard for survival”.
Its warning comes ahead of the annual round of festive trading statements from some of the biggest names on the British high street.
Fashion chain Next is due to kick off the reporting tomorrow. Most analysts are forecasting a robust performance by the group, which resisted heavy discounting in the run-up to Christmas.
However, Company Watch has lowered its financial health rating on Next from 70 to 64, while Marks & Spencer has fallen ten points to register an H-Score of 58. Both retailers are in the “championship” category of the firm’s football-style league table of likely winners and losers.
Fellow fashion business Zara tops the upper reaches of the “premier league” section, with a rating of 91, up from 59, with supermarket giant Morrisons and Swedish-owned clothing chain H&M grabbing second and third places respectively.
Among those retailers propping up the “lower leagues” are Dixons, HMV and Thorntons, each of which has reported dreary sales figures in recent weeks.
The weakest ratings were reserved for Clinton Cards, with a score of just one, and up-for-sale Blacks Leisure, which gets zero points.
Company Watch said that since the launch of its H-Score system in 1998, it has identified nine out of ten corporate insolvencies or restructurings in advance.
Across all business sectors, the firm is forecasting an 18 per cent hike in UK corporate failures this year to 27,500.
Nick Hood, head of external affairs at Company Watch, said: “With so many negative pressures bearing down on consumer spending and the peak Christmas trading season now behind them, it is difficult to see how the more financially fragile retailers will make it through the barren retail winter.
“Their bankers, suppliers, landlords and the trade insurers will all be focusing on which companies to support and how to mitigate their potential losses on the less fortunate retailers.”
He added: “Although the vast majority of retailers going under will be SMEs, we can expect further casualties among the high-profile companies trading on public equity markets.”
The British Retail Consortium has already raised fears of a fresh wave of failures following the poorest festive trading period in three years. The trade body is worried that many smaller retailers in particular could see the latest quarterly rental payments proving the last straw as they struggle with the tightening in consumer spending.
One of the biggest gainers in the Company Watch listings is Primark. The discount clothing firm, which recently opened a store on Edinburgh’s Princes Street, has seen its H-Score climb to 45 from 23 last year. Britian’s biggest retailer, Tesco, dipped to 60 from 61.