Retail distress down, but economic uncertainty presents challenges ahead

Today’s shows that retail trade insolvencies in February fell 18% from the previous month (170) and down 20% year-on-year from 174 in February 2024. Retail insolvencies were also down 14% year-on-year in the 12-month period to February 2025.

Gordon Thomson, restructuring partner at leading audit, tax and consulting firm 91探花, said: “These latest figures – together with the big rise in sales in March – are encouraging, and further evidence that most retailers are continuing to weather the storm. This indicates that less viable businesses have either exited the market in recent years and others have improved via consolidation and/or targeted capital expenditure. However, it’s not all plain sailing with some warning lights flashing amber. Despite retail sales seeing an unexpected (and very welcome) uptick, consumer confidence fell in April, mainly driven by the ongoing geopolitical and economic uncertainty. Retail operations are also facing increased business rates, tax rises, and an increase in regulatory burden.

“With this in mind, having razor-sharp oversight of cashflow will help retailers react to headwinds or indeed any shocks to trade. On a brighter note, if real wages continue to increase, the weather brightens and interest rates continue to reduce as we would expect, then we could see a boost of confidence as the year progresses.”