The number of UK businesses in “critical” financial distress jumped 17 per cent over the year to the end of March, with a significant deterioration seen in the first quarter of 2019 as Brexit uncertainty deepened.
Research by insolvency firm Begbies Traynor found that almost have a million businesses – one in seven of all UK companies – was in significant financial distress in the first three months of 2019.
The number of significantly distressed companies in the property sector jumped by 13 per cent to 48,182 for the quarter, from 42,512 in the same period a year ago.
Property was the worst-hit sector for the second quarter in a row, hurt by people holding off making big purchases including new homes.
House prices fell in England for the first time since 2012 in the three months to March 2019, dragged down by London and the South East.
1/9 Toys ‘R’ Us
Customers shop at a Toys ‘R’ Us store. The retail chain announced plans to shut all of its US stores, becoming one of the biggest casualties of the retail shakeout amid the rise of e-commerce. The debt-plagued company announced that it has filed a motion for bankruptcy court approval to liquidate its US operations, a move that could hit 33,000 jobs. The UK retailer failed to find a buyer and said their 105 Toys R Us stores would remain open until further notice, with administrators appointed to begin “an orderly wind-down”.
AFP/Getty
2/9 New Look
New Look announced it will shut 60 stores and cut 980 jobs as part of a restructuring plan agreed with its creditors.
PA
3/9 Maplin
A Maplin store displays closing down notices after the company went into administration.
Reuters
4/9 Claire’s Accessories (US only)
People walk past a Claire’s store in downtown Chicago. The chain that has pierced the ears of millions of teens has filed for Chapter 11 bankruptcy protection. The accessories chain said that its stores will remain open as it restructures its debt.
AP
5/9 Carpetright
Carpetright announced that it has secured £12.5m of emergency funding from one of its largest shareholders and that it is exploring the opportunity of seeking approval for a restructuring plan under which it would slash rents and shut stores to avoid going into administration.
Reuters
6/9 MOSS BROS.
Suits specialist Moss Bros has reported a drop in earnings and profit in 2017, blaming a “tough end to the year” and stock shortages which hurt sales. Chief executive Brian Brick said: “Going forward, we are planning for an extremely challenging retail environment, not least because of the uncertain consumer environment and significant cost headwinds.”
PA
7/9 Mothercare
Mothercare warned over profits after UK sales plunged in the run-up to Christmas 2017, with consumer spending falling in both stores and online.
PA
8/9 House of Fraser
The Chinese owner of House of Fraser plans to sell its majority stake in the troubled department-store chain, adding to the upheaval on the UK’s shopping streets.
Getty Images
9/9 Conviviality – Bargain Booze
Bargain Booze owner Conviviality could be heading for administration after failing to secure emergency funding, placing 2,500 jobs at risk.
AFP/Getty
1/9 Toys ‘R’ Us
Customers shop at a Toys ‘R’ Us store. The retail chain announced plans to shut all of its US stores, becoming one of the biggest casualties of the retail shakeout amid the rise of e-commerce. The debt-plagued company announced that it has filed a motion for bankruptcy court approval to liquidate its US operations, a move that could hit 33,000 jobs. The UK retailer failed to find a buyer and said their 105 Toys R Us stores would remain open until further notice, with administrators appointed to begin “an orderly wind-down”.
AFP/Getty
2/9 New Look
New Look announced it will shut 60 stores and cut 980 jobs as part of a restructuring plan agreed with its creditors.
PA
3/9 Maplin
A Maplin store displays closing down notices after the company went into administration.
Reuters
4/9 Claire’s Accessories (US only)
People walk past a Claire’s store in downtown Chicago. The chain that has pierced the ears of millions of teens has filed for Chapter 11 bankruptcy protection. The accessories chain said that its stores will remain open as it restructures its debt.
AP
5/9 Carpetright
Carpetright announced that it has secured £12.5m of emergency funding from one of its largest shareholders and that it is exploring the opportunity of seeking approval for a restructuring plan under which it would slash rents and shut stores to avoid going into administration.
Reuters
6/9 MOSS BROS.
Suits specialist Moss Bros has reported a drop in earnings and profit in 2017, blaming a “tough end to the year” and stock shortages which hurt sales. Chief executive Brian Brick said: “Going forward, we are planning for an extremely challenging retail environment, not least because of the uncertain consumer environment and significant cost headwinds.”
PA
7/9 Mothercare
Mothercare warned over profits after UK sales plunged in the run-up to Christmas 2017, with consumer spending falling in both stores and online.
PA
8/9 House of Fraser
The Chinese owner of House of Fraser plans to sell its majority stake in the troubled department-store chain, adding to the upheaval on the UK’s shopping streets.
Getty Images
9/9 Conviviality – Bargain Booze
Bargain Booze owner Conviviality could be heading for administration after failing to secure emergency funding, placing 2,500 jobs at risk.
AFP/Getty
Brexit has been keeping people from entering the market according to estate agents, while increased taxes on buy-to-let investments have continued to dampen demand.
Julie Palmer, partner at Begbies Traynor, said: “Many UK businesses are currently in limbo and deferring major investment decisions.
“This, combined with consumers holding back on big-ticket purchases, has resulted in increasing significant distress across many sectors.”
Companies involved in buying, selling and letting properties took the biggest hit, with a 16 per cent rise in the number in significant distress.
The construction sector saw a 10 per cent to 13,018 while the financial services, leisure and culture industries also suffered.
A series of well-known companies including Debenhams and House of Fraser have recently gone into administration.
Meanwhile, business investment fell for a fourth consecutive quarter in the final three months of 2018, the first time this has happened since the economic downturn of 2008 to 2009.
