Big UK retailers go bust

The Independent reports two more big UK retailers have collapsed into administration, becoming the latest victims of the Christmas retail crisis and sparking fears over hundreds of jobs.

USC, the 58-store branded fashion chain backed by the business tycoon Sir Tom Hunter, appointed the accountancy firm PKF as administrator and Passion for Perfume, a 45-store fragrance chain, has also called in the administrators.

They follow the appointment of administrators by Whittard of Chelsea, the coffee and tea specialist, The Officers Club, the menswear chain, and Zavvi, the entertainment retailer.

It's like the old Soviet Union

A Toronto Sun columnist, Eric Margolis, likens the US car industry to the old Soviet Union:

Economically declining, bereft of new ideas, producing unwanted products, run by dimwitted careerist bureaucrats.

America produces the wrong cars, and far too many. The bloated auto industry must downsize. It has been selling cars only thanks to the steroid of cheap, easy credit — in effect, almost giving them away. Now that the drug is largely cut off, sales have nosedived.”

He makes the excellent suggestion that Americans (and us all) must

relearn the old verity that one must save for purchases and rainy days; that gambling with your home is idiotic; that there is no substitute for hard work or manufacturing; and that it’s always very risky to trust politicians or financial “professionals” with your money.

WSJ today quotes analysts estimating that from about

10% to 26% of all US retailers are in financial distress and in danger of filing for Chapter 11.

Retailers will trim inventory and reduce the number of suppliers. That, in turn, will cause a ripple effect, prompting a number of weaker manufacturers, small brands and underfunded fashion labels to fail. New retail formats and concepts stores are likely to be curtailed in the coming year. And luxury-goods makers already are working to cut the long lead times between orders and store delivery as a way to reduce risk.

“We will have a lot fewer stores by the middle of 2009,” says Nancy Koehn, professor of business administration at Harvard Business School. “It’s happening very, very quickly because of the financial crisis and the recession.”

Figures show how deeply retailers have been hit

Some shops will definitely have to replace Boxing week sales with Closing Down sales like this one.

Figures in the US out today show just how badly retailers have been hit over Christmas.

Sales at specialty apparel retailers like Gap Inc and Abercrombie & Fitch Co fell 19.7 percent this year, SpendingPulse said. When factoring in department store results, sales fell about 20 percent, McNamara said.

Women’s apparel sales fell 22.7 percent; men’s clothing sales were off 14.3 percent, and footwear sales fell 13.5 percent, SpendingPulse said.

This year, the higher the price, the more consumers did without, SpendingPulse said. Sales at specialty electronics and appliance chains such as Best Buy Co Inc fell 26.7 percent, it said.

Luxury sales, which include sales at high-end department stores, leather goods boutiques, pricier jewelry stores and restaurants, fell 34.5 percent, SpendingPulse said. Excluding jewelry, sales fell 21.2 percent.

List of retail failing is growing

There’s very little joy left for retailers this season,” says C. Britt Beemer, founder of America's research group. “Wal-Mart continued to dominate shopping this year predicting a rash of financial problems for retailers in the wake of the dismal holiday season. A number of major names, such as Macy’s, are in trouble over the long run, and we will undoubtedly see more retail bankruptcies in the New Year.
NBR reports the list of smaller retailers being forced into receivership or liquidation is growing as consumers keep spending under tighter control.

Tie Rack was placed into liquidation by Corporate Finance and insolvency firm Staples Rodway is managing several recent receiverships such as high-end Auckland furniture stores Eon Design, which has this notice (above right) on its now-empty Britomart Place store.It’s also dealing with the receivership of Garlands Furnishing Specialists after 50 years in business and also managing The Fine Wine Delivery Company through voluntary administration, is trying to offload wine stocks from the recently closed Christchurch outlet.