By Maximilian Clarke
Though barely in its infancy, 2012 has already brought with it a string of high profile retailers entering or teetering on the brink of collapse.
At this moment, a crippling debt burden at Peacocks could bring the chain crashing down bringing with it as many as 9,000 jobs. Past Times and Kodak have also entered administration, whilst Habitat, Jane Norman and Srewfix all collapsed in 2011.
But analysts at Barclays corporate have noted that the spate of collapses need not be interpreted as a sign of things to come. The retailers in question collapsed not simply due to poor trading conditions experienced across the UK as a result of the consumer confidence crunch, but because of poorly managed debt. Richard Lowe, Barclays Corporate Head of Retail & Wholesale explains:
“Christmas didn’t turn out to be the bleak midwinter many were predicting for the high street with sales up both year on year and month on month. Inflation also fell sharply last month on the back of lower fuel and clothing costs demonstrating retailers’ readiness to cut prices in the final days before Christmas to encourage shoppers.
“2012 has already got off to a dramatic start, with Peacocks and Past Times both going into administration this week. However, it is worth remembering that the majority of retailers have sorted out their capital structures so there are not the same levels of debt in the sector as there were five or six years ago, leaving most retailers in a strong position to deal with the current trading conditions”.
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