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Retailers Should Refocus on Cash Flow as Sales Plummet

Hundreds of shops close across the country, as the high street is set on course for its worst year in at least a decade.

 

It will come as no great surprise to anyone that British retail has once again been dealt a bad hand. British high streets have been wrecked with low profits and plummeting sales figures, leading many household names to declare insolvency or cling in desperation to restructuring procedures. While the weather warms up and other sectors show signs of strength, retailers desperately try to inspire an upturn in consumer confidence.

New figures released by the consultancy BDO revealed how year-on-year sales fell by 1.7 per cent last month. This is the fifth successive month of in-store declines, signifying the severity of the problem. The retail sector has been in distress since last year’s holiday season, which gifted the sector with disappointing sales figures and an unprecedented lacklustre Black Friday. High costs, tough online competition and stunted consumer spending have further weakened retailers since the beginning of the year.

While many businesses have viewed insolvency and Company Voluntary Arrangements (CVA)  as their only options, there is a multitude of alternatives to firms who are in financial distress. Rather than allow an insolvency practitioner to reshape the whole business’ structure, business owners could uncover extra cash within their business. At the Credit Protection Association, our debt recovery services free up cash flow through the recovery of residual debt and bring our Members back from the brink.

BDO said that the results for June had capped the end of a “crippling” six months in which negative like-for-like growth was recorded in lifestyle goods (-0.3 per cent), fashion (-2.3 per cent) and homewares (-2.4 per cent). Non-store sales rose by 10.4 per cent but this was the lowest annual increase since December 2015 as retailers struggled to cope with a further erosion in consumer confidence.

Ms Michael said that sales last month had been particularly hit by torrential rain and localised flooding, with overall year-on-year store sales falling by 6.5 per cent in the first week. Sales started to improve over the rest of the month, helped by better weather, Father’s Day and the World Cup.

“This is a huge red flag for businesses and government. The retail sector plays a hugely significant part in our economy, in employment, in taxes and in its societal impact on local communities. It is more important than ever that the government stands up for the future of the great British high street.”

 

Sophie Michael, head of retail and wholesale at BDO, said: “The bleak and crippling start to the year shows no sign of abating, with deep discounting set to eat into margins that are already being stretched paper thin by poor sales and rising costs, including the much-discussed issue of unfair business rates on high street retailers. These numbers confirm what many retailers have already suspected — this has been the worst first half of a calendar year for more than a decade.”

Trading on the high street has become dangerous, with low profits leading even the largest retail chains into insolvency.  While many business owners perceive insolvency as the solution, there could be softer options available. Alternative finance platforms, such as credit management and debt collection companies, not only rescue their Members from the brink but strengthen finances to the point of prosperity.

At the Credit Protection Association, many of our Members are from within the retail sector and have expressed their despair at the landscape. In response, our debt recovery service has freed up their cash flow, our credit checks have secured new financial strength, and our newest department has unlocked new prospects.

Here at CPA, we fight to the tooth for our Members, particularly those who trade on the high street. We have now created a new department within our company dedicated to getting our members rightly compensated in accordance with the Late Payment of Commerical Debts (Interest) Act 1998. This has unlocked hidden cash and potential for our members and brightened their prospects and longevity on the high street.

 

 

Please call us on 0330 053 9263 to discuss how CPA can help your cashflow.
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The Latest Insolvencies to 06 Jul 2018.

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