The competitive womenswear sector is at risk of insolvencies in the new year, as increased discounting and mild weather has proved challenging for retailers in the final quarter of 2015.
Trade credit insurer Atradius has warned of a “perfect storm” that could lead to a “fresh wave of insolvencies” in 2016.
Owen Bassett, senior risk underwriter, said clothing retailers, in particular those in female fashion, have struggled in the retail industry as a whole in the last quarter.
“The female fashion sector is now saturated with many similar businesses competing for the same pound,” he said. “Those that cannot compete in terms of operational efficiency or that don’t continue to appeal to consumers’ taste in fashion will find themselves in difficulty.”
Insolvency firm Begbies Traynor added 24,737 retailers across the whole industry are suffering “significant” financial distress, up from 24,251 at the same time last year.
Julie Palmer, partner at Begbies Traynor, said: “This year there has been more discounting than ever before from retailers in the run-up to Christmas, as Black Friday deals extended into more severe festive promotions to try and boost lacklustre sales volumes.
“Unfortunately the swaths of cut-price deals seem to have had little effect, with levels of financial distress among retailers even higher than last year’s shocking statistics.”