As discussed in two recent Walsh Taylor articles (which can be found here and here), the UK retail sector has taken a substantial hit over the course of 2018. In Q2, the number of FTSE-listed businesses issuing profit warnings increased dramatically, and this was shortly followed by the news that organisations were planning to cut back on staff.
Whilst the festive period is usually a busy one for shops and their online-only counterparts, the industry was earlier this week shook by the news that fashion giant ASOS has warned of weak profits for this financial year.
The firm commented that their reductions in prices to match competitors had led to ‘unprecedented discounting’ that did not result in more sales. With economic uncertainty and weaker consumer confidence both present, these have also been mooted as causes for the company’s ‘weakest growth in online clothing sales in recent years’. This resulted in the brand’s shares falling by almost 40% in the morning trading of Monday 17th December.
Unfortunately the bad retail news did not stop there. Moving on to the high street, the US-based owner of Boots, Walgreens Boots Alliance, has said their UK pharmacy sales fell by 3.5% in the three months leading up to the end of November. They have cited a ‘weak retail environment’ as a potential reason and are aiming to launch a global cost-cutting programme to save on money.
Looking forward to next year, those operating in the sector are predictably assessing ways of improving their fortunes for 2019. With many retailers now struggling to influence buyers’ behaviour, some are waiting to analyse the landscape of the marketplace, whereas others are prioritising a digital strategy to combat the cost pressures of physical stores.
As with all businesses suffering from financial pressure, we urge anyone needing help to seek advice as soon as the issues are identified. This will allow them to be made aware of all the potential options available to them.
For more information on how our licensed insolvency practitioners and business recovery team can help, please call 03300 244 660.