Jobs: The only way may be up for retailers

Fewer companies in the retail and property sectors have been going into administration, says a market watcher who believes it may signal the only way is up.

Business services firm KPMG says figures issued by the Insolvency Service reveal retail administrations are down 47 per cent with those in the property sector reducing by 38 per cent,

In the first first three months of 2013 total appointments are down 28 per cent on the previous year.

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Richard Fleming, UK head of restructuring at KPMG, said some retailers are undoubtedly benefiting from the demise of those who have fallen in the last two years. He added: “Today’s numbers may well suggest that we have reached the bottom of the market, setting the agenda for a gradual return to growth, but market fundamentals such as the shift away from large property portfolios to internet sales mean that many companies, while not on the brink of failure, may well be operating under ‘zombie’ conditions, unable to access the finance they need to right size their business models and make the necessary investments in systems needed for the new multichannel trading environment.

“If zombie companies are unable to resolve their financial or operational model issues, their gradual decline could well necessitate an insolvency mechanism, such as a ‘pre-pack’ or a company voluntary arrangement.”

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