By Maximilian Clarke
Arcadia Group plc this morning announced their decision to close 260 outlets across the UK on the back of plummeting profits.
The fortunes of the retail group, owned by bilionairess tax-exile Tina Green and run by her husband, Sir Philip Green, evidence the challenging conditions faced by retailers across the UK, as Frances Coulson, President of R3 insolvency service explains:
“Following last week’s pick up in retail sales, the news of Arcadia’s 38% fall in annual profits brings us depressingly back down to earth. The group, which owns Burton, Dorothy Perkins and Miss Selfridge, is likely to be only one of many that is still struggling in the downturn.
“The next few months will be crucial for retailers who need to build up their reserves before the New Year, as this is when consumers will curtail their spending once again.
“Earlier this year, R3’s Business Distress Index showed the retail sector was experiencing significantly higher signs of distress than any other sector, with retail businesses more likely than any other to be concerned about their debt levels (41%).
“The figures showed that six in ten (58%) retailers were experiencing a decrease in profit which was 24% higher than the cross sector average. Close to half (48%) of retailers had suffered a fall in sales volume and a quarter of retailers said they were having cash flow difficulties — 9% more than the cross-sector average.
“Things are far from being back to normal on the high street. The difficult international economic situation, the government's austerity measures, high inflation and stagnant wages will continue to put pressure on consumers.”
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