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Retail administrations drop 50%

Published: 12 October 2010
Administrations for the first nine months of 2010 are down 36% compared with the same period in 2009, according to new research from Deloitte.
Retail administrations drop 50%
So far, 2010 has seen a total of 1,648 administrations, compared with 2,589 in the same period last year. Furthermore, the figure has dropped 20% from 2,061 in the same period in 2006, the last full year before the financial downturn began.

The research also shows that quarter on quarter, administrations are falling to a pre-credit crunch low. Q3 2010 saw 476 administrations, down 36% from 733 in the same period last year, and down 8% on Q2 2010.

The most pronounced drop was seen in the retail sector, with administrations down 50% on the same nine-month period in 2009, and down 13% on the previous quarter.

Deloitte reorganisation services partner Lee Manning said: "Whilst the economy holds its breath for the outcome of the Comprehensive Spending Review, these figures offer a glimmer of hope. For the first time since the financial crisis began, we're beginning to see a consistent drop in the numbers of companies hitting the wall. This can only be a good thing."

However, he warned: "With the impending government spending cuts, the forthcoming rise in VAT and the impact of higher income taxes and National Insurance, there is no question that consumers will have less disposable income. They will have to economise and where they choose to make their cutbacks will clearly impact the industry. Whilst we are unlikely to return to 2008/2009 retail administration levels, there are tougher times ahead. It would not be surprising to see more retail casualties."

The BRC today reported slow growth on the high street, with retails sales values up 0.5% on a like-for-like basis in September 2010, compared with a 2.8% rise for the same month last year.

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