THE UK food industry’s troubles were laid bare today after a report revealed the sector had suffered the sharpest rise in financial distress compared with other UK industries.
According to Begbies Traynor’s latest Red Flag update, which monitors the health of UK companies, levels of “significant” financial distress among UK food retailers rose by 11 per cent over the past three months and by 53 per cent over the year to include 4,239 struggling businesses.
More severe cases of “critical” financial distress rose by 23 per cent in the last quarter, including seven large food retailers, which were categorised as businesses with more than 500 employees.
“With Tesco in trouble following revelations of its £250m profits guidance overstatement, and dampened sales expectations from Morrisons and Sainsbury’s, all have been forced to cut prices in a bid to encourage shoppers back through their doors and recapture market share,” Begbies Traynor partner Julie Palmer said.
She added that supply chain disputes, inefficient legacy sites and, in some cases poor financial management, were among the biggest issues facing the grocers.