Retailers expected to enter into administration after dismal Easter

After a dismal Easter weekend’s trading, a flood of retailers are expected to be forced into administration.

The Centre for Economics and Business Research anticipates that sales fell 14% over the Easter holiday compared with the same period last year. SPSL, which measures customer numbers, says visitor numbers to DIY shops fell 13% on Good Friday from a year ago.

In addition, quarterly rent payments are due this week, an aspect which many experts believe will force weaker retailers out of business. The poor weather over the bank holiday weekend may be the final straw for many cash-strapped chains.

It is expected that banks will be unsympathetic to struggling businesses, given the state of the economy and will probably refuse to extend emergency credit.

Adam Plainer at law firm Jones Day said quarterly rental payments can inflict severe cash flow pressures on many businesses, especially when trading conditions are poor. This week’s rent payments will come at a particularly bad time for those retailers who are already feeling the pressure and this could be the final straw which tips them over into an insolvency situation.

Earlier this month, clothing chain Select Retail, had to be rescued from administration while Mexx, the US-owned fashion retailer, announced it was to close its UK stores. Furthermore, department store John Lewis reported its biggest sales decline for a year.

French fashion chain Morgan yesterday informed employees that all its 40 British stores are likely to be closed by the end of April because of losses. A spokesperson said they had been hit by competition from cheaper rivals such as Topshop as well as the slowdown in consumer spending.

It has also transpired that sales of big-ticket items have fallen with electricals group Comet saying it expected sales of fridges and washing machines to dwindle as people ‘make do’ with old models.

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