Shops braced for rent D-Day
THE HIGH street is braced for a fresh blow as quarterly rent demands are due today and hard pressed retailers must pay their landlords.
Thousands of firms will have to fork out three months’ rent in one go, with many already struggling to make ends meet in the tough consumer climate.
The payments total £3.4bn across the UK and come as consumer demand remains weak.
Pressure has been mounting on retailers, with the CBI revealing this week that shop sales are slowing at the fastest rate for two years, with a balance of -15 per cent of retailers reporting slower turnover in September.
The last quarterly rent demand in June triggered the biggest wave of administrations since the height of the recession, with Habitat, Moben’s owner Homeform, and Jane Norman among those companies going bust.
Analysts expect the full impact of the latest rent demands to hit over Christmas if the traditional sales surge does not meet expectations.
Meanwhile the number of retailers using company voluntary arrangements (CVA), a form of insolvency procedure to renegotiate their debts with landlords, has jumped by almost a quarter in a year, according to a survey by City law firm Wedlake Bell.
The survey showed that 54 retail businesses have undergone CVAs in the 12 months to the end of June, up from 44 in the previous year.
Wedlake Bell predicts that today’s quarterly rental deadline could prompt a new wave of retail sector CVAs as firms seek to cut their property costs in an attempt to save their business.
Edward Starling, head of business recoveries at the company, said: “Retailers are faced with a toxic brew of woes caused by the credit crunch, sluggish summer trading and the next quarter’s advance rental payment.
“Troubled retailers, along with some creditors, see a CVA as a good way to slash the business’s historic debts.”