ICSM Business News: as retailer Joules struggles to solve its financial crisis, expectations that more stores will close as interest rates jack up the cost of debt

By Harry Mottram: In a word: debt. That’s the issue behind a raft of business closures across the British economy in a number of sectors with retailers in particular seeing record collapses. The high street in particular has not been helped by the switch to online shopping, the Covid shutdowns, penalising business rates, a hike in interest rates and double-digit inflation.

The fashion chain Joules is the latest business trying to survive weighed down with more than £20 million pounds of debt. It’s openly suggested it may go for a Company Voluntary Arrangement (CVA) if it can negotiate one with its creditors. The trade publication Drapers reported it was seeking rent reductions on some its 130 stores along with new agreements with creditors to ease the pressure having seen its share price drop and its overall  value fall to just over £8 million.

ICSM understands that KPMG have been helping the giant retailer manoeuvre its way out of the crisis in order to trim some of its stores and shed some of its 1,000 strong work force. It does not bode well for suppliers who are chasing millions of pounds of unpaid invoices.

This year has seen some big names go bust or get into serious trouble in the retail sector. With each hike in interest rates the ability to service debt becomes harder to point of insolvency – and brace yourself as there are more interest rate increases to come say the Bank of England.

Ian Carrotte of ICSM said it was a vital sector for the printing and allied trades including sign-makers and the graphic arts – plus logistics, the rag trade, wholesalers of accessories and a raft of suppliers from computer companies to the cleaners.

He said: “We’ve seen the Jupiter Group in Newport go into administration last month, the huge Bon Accord Shopping Centre up in Aberdeen also collapse this autumn. Wholesaler Tree of Life went in the summer, the car people Carzam collapsed as well and the café chain Love Brownies in Yorkshire also went bust. The online fashion group Missguided showed it’s not just the high street is affected as they went west in May with trade creditors paid a pitiful 2p in the pound by the administrators.”

McColl's Retail Group also got into trouble with a debt mountain of more than £100 million – and have been the subject of a partial buy out by Morrisons who already had a steak in the supermarket. Morrisons are taking over around 400 or so of the stores and rebranding them essentially as convenience stores and at the last count were effectively buying the whole chain found 123 years ago in Scotland by a professional footballer.

Sofa Workshop, Steptronic Footwear, T M Lewin, Shirtmaker, J C Rook and Sons, butchers,  Dawnfresh, Shabby Store, Studio Retail and Big Home Shop, join a long list of retailers who have hit the buffers this year. Those with not so long memories will have noted how Debenhams, Top Shop, Beales, Bonmarche, Jaeger, Edinburgh Woollen Mill and Cath Kidson have already passed in retailing history.

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About ICSM Credit

ICSM Credit has more than four decades of experience as a credit intelligence group whose members gain inside information about firms in trouble allowing them to avoid bad debts and rogue traders. To join costs less than a tank of fuel - while at the moment there's a special free temporary membership offer during the Covid-19 crisis which gives access to free legal letters. ICSM also has an effective debt collecting service which has a global reach - ask for details from Paul.

For details about ICSM Credit call 0844 854 1850 or visit the website www.icsmcredit.com or email Ian at Ian.carrotte@icsmcredit.com on how to subscribe and to join the UK’s credit intelligence network to avoid bad debts and late payers. Follow ICSM Credit on FaceBook, Twitter and YouTube and Ian Carrotte on LinkedIn.

To keep up to date subscribe to the FREE ICSM Credit Newsletter to hear all the latest insolvency news and to see who has gone out of business click on the orange panel on the top left of the home page of the website www.icsmcredit.com or send an email to Ian.carrotte@icsmcredit.com

For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk