High Street Retailer East Falls out of Fashion

24th April 2018.

Fashion retailer East is due to cease trading next week after administrators failed to find a buyer, says City AM.

The clothing chain went into administration back in January but in spite of various attempts to find a buyer, the retailer has finally collapsed in a heap. All stores will cease trading as early as next week and almost 300 employees will be made redundant when the chain stops trading on 4th May. The lease of a branch in Reigate was sold last month for £75,000 and another 12 stores are to close as the leases are transferred to other parties.

Unfortunately, East is just the latest in a long line of fashion retailers who have fallen down on hard times, from New Look and Select as well as family retailer, Mothercare. The soaring business rates and lingering Brexit uncertainty, have negatively impacted consumers and business owners alike. Now that wage growth is finally moving faster than inflation, the economy has a chance to overtake its competitors. However, this cannot be done with its high street as bare as they are at present.

Both the squeeze on households and the drop in consumer credit have reduced the excitement once felt in executing a shopping spree. Once an act of pleasure and even perceived as therapy, retail is now considered as nothing more than a search for the essentials. In the previous year, inflationary levels have been high, and as a result clothing and other big ticket items have lost their monetary and emotional value in the eye of the consumer.

In order to grab the attention of the passerby or the internet surfer, businesses need to boost their brand. This could mean hiring a visual merchandiser in-store or a web designer to create eye-catching content online. For either gesture, the business needs capital. At the Credit Protection Association, our debt recovery services chase down unpaid invoices, and free up the necessary cash flow that could fund any new expansion or growth opportunities.

The move comes three years after East closed 19 stores and entered pre-pack administration three years ago.

Creditors of the company are owed money to the tune of just over £10.1m.

The stores will continue trading until the end of next week, although gift cards are not being honoured.

The group’s administrators were in line for bills of £174,045 as of the beginning of April.

Whether you are big, or small, fashionable or not; all businesses are vulnerable to closure. There has been a common misconception that so-called ‘blue chip’ companies are without risk due to their size. Unfortunately, this is inaccurate, as the collapse of both Carillion and Toys R Us has illustrated.

Whatever your size you must conduct accurate and thorough credit checks. This means monitoring suppliers, customers, and even yourself, to ensure your own capital is sufficient to continue trading. Complacency can lead to disaster, so it’s important to remain conscientious.

While issues such as Brexit are not going to ease up in the short-term, their influence should not be inevitable. At the Credit Protection Association, our debt recovery services free up cash flow, while our credit management products protect it. Our credit checks, credit scores, and company directories, all ensure our members know exactly who they are dealing with.

While a credit control procedure can be maintained in-house, the CPA team’s dedication and unlimited time for the cause will more likely reach a positive conclusion. Keeping up to date with financial paperwork- including all late payers and residual debt- will keep your business fresh and prolong its shelf life.