23 July 2014

RETAIL: Down but not out

06/03/2009

Although the retail sector decline eased slightly at the start of 2009, as UK consumers ploughed into the January sales, the respite proved short lived.

Indeed, business body the CBI reports a poor start to the year for the majority of UK retailers, with 63 per cent admitting that year-on-year sales volumes were down in the first half of January and only 16 per cent seeing an improvement.

Confidence remains battered, with a balance of 52 per cent of the CBI’s 20,000 surveyed firms expecting sales to decline in February, the weakest forecast since the survey began in July 1983.

‘Most of the sector continues to struggle as the recession bites more deeply, and February will be tough,’ laments CBI chief economic adviser Ian McCafferty. ‘It is possible that pre-Christmas discounting by some retailers numbed many shoppers to the allure of the new year sales.’

On the positive side, those retailers that do survive should have the pick of the choicest high street sites, given the raft of failures in the sector. According to research into the administration announcements of 22 retailers from PricewaterhouseCoopers, the accounting giant posits that if just ten per cent of national retailers get into financial difficulty in 2009 then an additional 4,400 stores could come onto the market, causing rents to plummet.

PwC corporate restructuring partner Barry Gilbertson says, ‘When all this new retail space is added to our predicted store closures coming also onto the market, the downward pressure on retail rental levels increases even further. For tenants, this pressure should mean cheaper rents, but for landlords life will be even tougher, as some tenants go out of business and other tenants push hard for lower or deferred rental payments’.

Tags: Credit crunch

Growth Company Investor: free trial

Since 2008, our share tips outperformed the benchmark by 281%. Take a free trial and get access to our recommendations today. Start free trial now.

Directors' Pay on AIM 2014

The most comprehensive review of AIM directors' pay available, and this year includes a record sample of 1,044 AIM-quoted companies. The full report is available to order for £365 + VAT. Click here for more info

Growth Company Features, Research and Analysis

In-depth coverage of selected AIM companies within the small-cap and fast growing company sector including AIM and PLUS Markets shares and listed stocks. Company research and analysis from GCI analysts updated daily.

What Investment magazine: save 45% on the shop price

Be the first to receive our independent analysis and research, designed to help you generate more wealth for you and your family over the long term. Subscribe and save.

Popular Features

Latest Features

Fund Manager Focus 07/07/2014

David Thorpe peers into the mind of Richard Watts.

Directors' Dealings 07/07/2014

Ben Jaglom considers what we can learn from the buying and selling activities of a number of listed concerns.

Exploration Insights 07/07/2014

Ben Jaglom considers the direction that the natural resources sector is headed towards. 

More Features