<TABLE cellSpacing=0 cellPadding=0 width=452 border=0><TBODY><TR><TD vAlign=top width=452 colSpan=2>Published December 5, 2008
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Fear of corporate failures grips Britain
Miss Sixty goes into administration; Moss Bros sounds earnings warning
By JANE MOIR
IN LONDON
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CORPORATE failures in Britain are expected to surge by 50 per cent in 2009 and hit record highs in 2010 as companies struggle to stay afloat amid the financial crisis.
<TABLE class=picBoxL cellSpacing=2 width=100 align=left><TBODY><TR><TD>
</TD></TR><TR class=caption><TD>Tight times: Sixty UK is expected to undergo a corporate restructuring, with no redundancies for now </TD></TR></TBODY></TABLE>More than 20,000 businesses are tipped to fold by the end of this year, according to a report by accountants BDO Stoy Hayward. The numbers will top 32,000 in 2009 and hit a new high of 32,400 in 2010. This would be close to the record 33,900 collapses seen in the last recession of 1992.
As Britain heads towards recession, businesses are struggling to deal with a tightening of credit, waning consumer demand and a contracting economy.
Construction firms have been hard hit as the property market slows to a virtual standstill. A predicted 6,400 construction companies will fail by mid-2009, according to the report. A further 3,200 real estate firms are expected to collapse.
'All sectors across the economy will be hit over the next 18 months as businesses feel the impact of the challenging environment,' notes BDO Stoy Hayward head of business restructuring Shay Bannon.
The retail sector is also likely to be a major casualty as consumption growth is expected to fall to one per cent by the end of the year.
According to business research company Experian, retail business failures were up by 21 per cent in November compared to October.
Over the past 12 months, the number of retail casualties has increased by 18 per cent, hitting 1,017 non-food retailers.
Already, a number of high street names are on the brink as discounts at stores fail to lure shoppers.
Woolworths went into administration last week after nearly 100 years of trading. Many of its outlets are expected to close before Christmas, with up to 30,000 jobs set to be lost. The company has debts of £pounds;385 million (S$873 million). Kitchens and furniture retailer MFI has also gone into administration. With more than 100 stores across the country, around 1,000 jobs are likely to be lost.
And the company behind fashion retailer Miss Sixty, one of Britain's most popular young brands, has also gone into administration. Sixty UK is expected to undergo a corporate restructuring, with no immediate plans for redundancies among its 250-strong workforce.
Other high street names are sending a clear warning to the market that times are tough. Men's retailer Moss Bros has already put out an earnings warning for the year, citing a slowdown in sales for the first ten months of 2008.
'I think anybody at the durable end of the market will be facing challenges,' explains David Stoddart, retail analyst at Altium Securities. 'Anybody on high street with a small space is facing a higher cost per square foot.'
He said 2009 is expected to be one of the worst years on record for retailers. Already, the pre-Christmas 'rush' of shoppers has not materialised as consumers tighten their belts.
As more stores close down, there is also likely to be a knock-on effect as areas become less attractive to consumers, Mr Stoddart explains. 'If there are holes in high street or the retail park, you get a bit of a spiral,' he said.
</TD></TR></TBODY></TABLE>
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Fear of corporate failures grips Britain
Miss Sixty goes into administration; Moss Bros sounds earnings warning
By JANE MOIR
IN LONDON
<TABLE class=storyLinks cellSpacing=4 cellPadding=1 width=136 align=right border=0><TBODY><TR class=font10><TD align=right width=20>
</TD><TD>Email this article</TD></TR><TR class=font10><TD align=right width=20>
</TD><TD>Print article </TD></TR><TR class=font10><TD align=right width=20>
</TD><TD>Feedback</TD></TR></TBODY></TABLE>CORPORATE failures in Britain are expected to surge by 50 per cent in 2009 and hit record highs in 2010 as companies struggle to stay afloat amid the financial crisis.
<TABLE class=picBoxL cellSpacing=2 width=100 align=left><TBODY><TR><TD>
</TD></TR><TR class=caption><TD>Tight times: Sixty UK is expected to undergo a corporate restructuring, with no redundancies for now </TD></TR></TBODY></TABLE>More than 20,000 businesses are tipped to fold by the end of this year, according to a report by accountants BDO Stoy Hayward. The numbers will top 32,000 in 2009 and hit a new high of 32,400 in 2010. This would be close to the record 33,900 collapses seen in the last recession of 1992.As Britain heads towards recession, businesses are struggling to deal with a tightening of credit, waning consumer demand and a contracting economy.
Construction firms have been hard hit as the property market slows to a virtual standstill. A predicted 6,400 construction companies will fail by mid-2009, according to the report. A further 3,200 real estate firms are expected to collapse.
'All sectors across the economy will be hit over the next 18 months as businesses feel the impact of the challenging environment,' notes BDO Stoy Hayward head of business restructuring Shay Bannon.
The retail sector is also likely to be a major casualty as consumption growth is expected to fall to one per cent by the end of the year.
According to business research company Experian, retail business failures were up by 21 per cent in November compared to October.
Over the past 12 months, the number of retail casualties has increased by 18 per cent, hitting 1,017 non-food retailers.
Already, a number of high street names are on the brink as discounts at stores fail to lure shoppers.
Woolworths went into administration last week after nearly 100 years of trading. Many of its outlets are expected to close before Christmas, with up to 30,000 jobs set to be lost. The company has debts of £pounds;385 million (S$873 million). Kitchens and furniture retailer MFI has also gone into administration. With more than 100 stores across the country, around 1,000 jobs are likely to be lost.
And the company behind fashion retailer Miss Sixty, one of Britain's most popular young brands, has also gone into administration. Sixty UK is expected to undergo a corporate restructuring, with no immediate plans for redundancies among its 250-strong workforce.
Other high street names are sending a clear warning to the market that times are tough. Men's retailer Moss Bros has already put out an earnings warning for the year, citing a slowdown in sales for the first ten months of 2008.
'I think anybody at the durable end of the market will be facing challenges,' explains David Stoddart, retail analyst at Altium Securities. 'Anybody on high street with a small space is facing a higher cost per square foot.'
He said 2009 is expected to be one of the worst years on record for retailers. Already, the pre-Christmas 'rush' of shoppers has not materialised as consumers tighten their belts.
As more stores close down, there is also likely to be a knock-on effect as areas become less attractive to consumers, Mr Stoddart explains. 'If there are holes in high street or the retail park, you get a bit of a spiral,' he said.
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