Clothing Chain Hung Out To Dry

31st January 2018.

East, the bohemian fashion retailer, has gone into administration and put 314 jobs at risk in the process. Recent dips in spending and high street shoppers have taken their toll on retailers, and East is another victim of the times.

East has now appointed administrators at FRP Advisory, the firm handling the demise of BHS. Here at the Credit Protection Association, we have picked up the pieces when businesses such as Palmer & Harvey, Multiyork and the construction giant Carillion, have self-destructed. We have reassured our members who will never seen their invoices paid, and we encourage them now to keep a close eye on their own financials and to not make the same mistakes these companies made.

The number of retailers toppling into administration rose in 2017 for the first time in five years as companies struggled with rising wage costs, a weaker pound and soaring business rates.

Geoff Rowley, joint administrator, said: “Unfortunately East is the latest high street casualty following a tough trading period at the end of last year.”

“The retailer was making progress to expand its footprint, particularly looking at international opportunities, however, it has been unable to secure the necessary funding to realise those plans”, he added.

The retailer’s administrators, FRP, said that it was now working on options to sell all, or parts of the business. The company’s accounts are a month overdue.

There is a common misconception that if the company is a ‘blue-chip’, that is a large company of high quality, that they are safe and without risk of collapse. What the last few months have proven is that couldn’t be further from the truth. There has been a long list of companies who have not survived the winter, as profit warnings and unpaid suppliers have gone ignored. With the latest collapse of construction group, Carillion, it was not that its profits were too high that proved dangerous, but that when they were too low they went unnoticed.

Here at the Credit Protection Association we have written numerous blogs and have conducted many discussions with our members, on the importance of credit checking your company. This means initiating a credit report when you first sign up a new customer, as well as monitoring them during their tenure. A business’ financial situation can change rapidly and it’s important that as business owners, you always know what your customers are up to.

If you have any questions or queries regarding the process of monitoring or credit checks within CPA, please get in touch with our team by the details below!