Fashion industry insolvencies have hit a five-year high, according to data from accountancy firm PricewaterhouseCoopers (PwC) seen exclusively by Drapers.
Over the past 15 financial quarters the number of clothing retailers and suppliers entering insolvency has risen by 147%, with 98 businesses in England and Wales becoming insolvent during the first quarter of 2008 alone.
The data follows high profile collapses in the sector, including value chain Ethel Austin, which went bust last month, and Select, which went into administration earlier this year but was subsequently rescued. The insolvency levels are the worst seen over the past five years and Mike Jervis, business recovery services partner at PwC, said: “We are in unprecedented times and we’ve never seen anything like this before. It is competitive and difficult, but it is not Armageddon.”
However, the data showed that smaller fashion retailers, with sales of between £1 million and £5m, are faring better than medium-sized firms with turnover between £5m and £25m.Fourteen small retailers went bust in the first quarter compared with 22 mid-sized chains.
Jervis added: “The immediate quarter figures are the highest for five years off the back of relatively low levels. The big peak in insolvencies is in the first quarter, just after retailers have paid rent and had their best selling period of the year, and then have to look at the harsh reality.” Surprisingly, the footwear sector has had fewer insolvencies than the clothing sector this quarter, with just 10 businesses going bust.