44% of fashion retailers face financial ruin, report warns
Almost half of all UK fashion retailers are facing financial ruin as competition, the fall in sterling and heavy discounting take their toll on the sector.
Figures from Opus Restructuring suggest that 3,991, or 43.6%, of UK fashion retailers are at risk of failure, a sharp deterioration since the same time last year.
Nick Hood, business risk adviser at Opus, said: "The UK fashion retail sector is under exceptional strain, with plenty of anecdotal evidence of sustained periods of discounting as consumers demand ever-lower prices and as the fall in sterling impacts their costs and profit margins.
"The failure of BHS and Austin Reed earlier this year shows what fate awaits clothing retailers who fail to invest and stay relevant to a constantly changing market."
Using data supplied by corporate health specialists Company Watch, Opus discovered that the at-risk fashion retailers were in its "warning area" with a rating of 25 or less out of a 100. Firms that fall within Company Watch's warning area could face either formal insolvency or a major financial restructuring during the next three years.