An increase in interest rates this year may threaten up to 400 high street retailers, it has been reported.
The Times has said New Look, Mothercare and Debenhams were among 392 retailers named in a study by Company Watch that suggested that they are 25 times more likely to suffer financial distress than other retailers.
Jo Kettner, chief executive of Company Watch, noted that much of the risk came from rising interest rates: “It’s no secret that the bank base rates are set to rise this year at least once and maybe twice. For many of the household names that are loss-making and already in our warning area, a rise in the cost of debt could well be the final straw.”
The study analysed 1,600 retailers with assets of more than £5m. Hobbs, Thomas Pink, Mamas & Papas, Missguided and Crew Clothing were all also found to be loss making on a pre-tax statutory basis. The study warned that a doubling of base rates would lead to a 4% increase in the numbers of loss-making retailers.