Home North East North East Retail Sector Holding Its Own In First Quarter Of 2019

North East Retail Sector Holding Its Own In First Quarter Of 2019

The North East retail sector is holding its own in the face of the storms hitting the High Street, according to insolvency and restructuring trade body R3’s latest research.

Despite the first quarter usually being the toughest time of the year for retailers, the proportion of the sector’s businesses across the region with a higher than normal risk of entering insolvency in the next 12 months has remained almost unchanged since Christmas (40%).

While this figure is marginally above the national average for the sector (39%), it is now at its lowest level since May last year – and over the last 12 months, the number of active retail businesses in the region has risen by well over 300, from nearly 4,700 in March 2018 to just under 5,000 today.

The latest data shows that North East businesses in eight of the 11 sectors monitored by R3 are performing better than the national averages for their respective industries, with only the North East’s manufacturing and professional services sectors along with the region’s retailers with a higher proportion of companies at elevated insolvency risk than the UK overall.

The North East pub and restaurant sectors continue to have the lowest proportion of companies at higher than normal insolvency risk of any region in the UK, while the agriculture and hotel sectors are in second and third place in their respective lists, and the transport/haulage and technology sectors are in fourth place in theirs.

The overall proportion of all North East companies with an elevated insolvency risk (42%) remains just lower than the 43% figure for the UK as a whole.

R3’s insolvency risk tracker is compiled using Bureau van Dijk’s ‘Fame’ database and measures companies’ balances sheets, director track records and other information to work out their likelihood of survival over the next 12 months.

Andrew Haslam, chair of R3 in the North East and head of specialist business advisory firm FRP Advisory LLP’s Newcastle office, says: “The sheer number of retail businesses that have disappeared in the last few years means we’re starting to forget a lot of names that were once a staple part of our High Streets.

“We’re still reading stories about troubles within the retail world, but the growth in business numbers and the relative stability in the sector’s insolvency risk levels would suggest there’s a belief out there that the North East’s retailers can still succeed.

“The deal struck between Mike Ashley and Intu to safeguard the future of the House of Fraser MetroCentre store among others undoubtedly had a positive effect on the status of the regional retail sector, and most especially on the fortunes of the businesses in its vicinity.

“One of the regular consequences of a major tenant disappearing from an anchor position in a shopping centre is the commercial problems it can lead to for nearby retailers, with the resulting drop in footfall quickly reducing their revenues and damaging their prospects.

“Financial problems can hit any type of company in any sector at any time, and if owner/managers want to give their business the best chance of getting past them, they need to be seeking qualified advice about what they can do as early as they can.”