The City is bracing itself for a raft of retail collapses in 2018

 
Helen Cahill
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The British Retail Consortium Announce The Worst Fall In Sales Since Records Began
Retailers reported their Christmas figures this week (Source: Getty)

Retailers painted a gloomy picture of the high street this week as several big names failed to cash in on the Christmas shopping season.

Gloomy financial updates from household favourites such as Marks and Spencer (M&S), Debenhams, and House of Fraser prompted analysts to signal several retail collapses may be on the cards in 2018.

Like-for-like sales at M&S' clothing arm fell 2.8 per cent as chief executive Steve Rowe failed to deliver the fashion turnaround he had promised investors. Food sales, which have supported the business for a number of years, were also in decline, falling 0.4 per cent.

Read more: M&S sales slump could've been worse after "better" Christmas saves the day

Molly Johnson-Jones, senior analyst at retail consultancy GlobalData Retail, said the food figures were a serious problem for Rowe.

"I think he will be replaced quite soon," she added.

"The main reason M&S has suffered such a decline is that consumers are searching for everyday essentials at the lowest price possible.

"Ultimately the way they need to be going is food on the go. It’s a much higher growth market."


Steve Rowe pledged to reverse the decline in sales at M&S (Source: Marks and Spencer)

Clive Black, retail analyst at Shore Capital, said Rowe may stay in place, but that the City can expect a management shake-up further down, including in the food department.

Meanwhile, Christmas trading figures from the non-food sector have shown signs of significant distress, with Debenhams, Card Factory and Moss Bros all warning on profits. House of Fraser, which has been asking for rent reductions from landlords, posted a decline in both online and store sales.

Read more: House of Fraser reports on dismal festive sales as it cuts discounts

Independent retail analyst Richard Hyman said the industry should brace itself for administrations in the year ahead.

"You do not have to look further than the [retailers] who have already demonstrated some distress," he said.

"Imagine what it is going to be like in quarter one when revenues are thinner - 2018 is going to be the year of retail distress. Quarter day in March is going to be interesting. That is when a large amount of retail is going to have a large rent bill to pay."

However, Black added the failures will create opportunities for other businesses. Discounters with a broad appeal such as Aldi, Lidl, and B&M will continue to steal market share, he said.

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