The 10 largest UK retail bankruptcies of the 2010s

14 February 2020 Consultancy.uk

As the UK’s economy staggers into another difficult year, the dark clouds above its retail sector show no signs of clearing. If firms are to weather the current storm ravaging the high street, they would do well to learn from the largest collapses of UK retailers over the last decade.

Last year, at least 21,816 jobs across 1,147 locations were lost due to businesses going into administration. The retail sector undoubtedly saw the worst of this – according to a recent Deloitte study, the number of administrations in the sector remained steady at 124, while much worse could soon be on the cards as the number of alternative insolvency procedures retailers are able to deploy to avoid collapse has declined dramatically.

In order to demonstrate which segments of retail may be most at risk from the worsening retail environment, researchers from ABC Finance have published an investigation into British administrations over the last decade. The study found that clothing brands are most prone to collapse, accounting for 41% of administrations, while household essentials such as furniture and plumbing companies are next in line at 19%. General shopping brands accounted for 10% of administrations, while beauty and jewellery made up 5%.

Further illustrating the exposed nature of fashion and household retail, six of the 11 largest administrations in terms of job losses came from stores involved in those lines of retail. The list of retail collapses compiled by ABC Finance included two department stores, two clothing providers, an electronics chain and a DIY store. Interestingly, while declining consumer spending power and online competition seem to have plagued the sector, a number of the biggest administrations have been hastened by scandals from the professional services industry.

Top 10 biggest retail closures in terms of jobs lost 2010-2019

1. BHS (Department)

11,000 jobs lost

Accountants signed off on the firm’s book as a
going concern in 2015, just days before the firm, which was encumbered with a substantial pension deficit, was sold for £1. One year later, BHS had collapsed, resulting in the loss of 11,000 jobs. As of 2016, it was the biggest collapse in the British retail industry since the demise of Woolworths in 2008, and provoked intense scrutiny from politicians keen to avoid further such incidents.

2. Thomas Cook (Travel)

6,500 jobs lost

178 years after being founded, one of Europe’s largest tour operators and holiday airlines succumbed to the threats of digital disruption, changing consumer behaviour, as well as an accounting scandal of its own. Since the collapse of Thomas Cook, the Financial Reporting Council
 (FRC) has been probing whether EY and PwC acted appropriately as the collapsed travel firm’s accountants.

3. Comet (Electronics)

6,000 jobs lost

Before its collapse, Comet was the UK's second biggest electrical retailer, with over 200 stores. Having suffered a protracted downfall in the wake of the global financial crisis, in 2012 Comet announced it was filing for administration, and entered administration the following day. Deloitte was appointed to act as administrators for the chain.

4. Poundworld (General)

4,256 jobs lost

In 2018, Poundworld was hit with a £5.7 million charge for onerous leases, a provision retailers prepare for when the cost of a lease is no longer covered by the income of a store. The news followed a widening of Poundworld's between 2016-17, from £5.4 million to £17.1 million, and led to its appointing administrators later in the year.

5. Blockbuster (Entertainment)

4,190 jobs lost

In 2013, video rental firm Blockbuster became the latest UK high street firm to go into administration after struggling against online competitors. The chain had 528 stores, but was rapidly left in the dust by digitally savvy competitors such as then up-and-coming Netflix. Famously one part of the global Blockbuster empire still remains, with the brand hosting a lone store in the town of Bend, Oregon, in the US.

6. Debenhams (Department)

4,000 jobs lost

Following a string of profit warnings and several rounds of lay-offs, Debenhams engaged advisors from Big Four firm KPMG to consider its options in the Autumn of 2018. At the time, Debenhams Chairman Sir Ian Cheshire insisted that the chain was not heading for insolvency, or that it was actively embarking on a company voluntary agreement (CVA). Nevertheless, Debenhams fell into administration in Spring 2019.

7. JJB (Clothing)

3,500 jobs lost

In September 2008, sportswear retail giant JJB released a less than impressive set of interim results, which included a warning from the auditors raising doubts over JJB's future as a going concern. By late 2012, the firm called in administrators and it was soon announced that Sports Direct had purchased part of the business, including 20 stores, the brand, and its website for £28.3 million.

8. Peacocks (Clothing)

3,350 jobs lost

In January 2012, Peacocks confirmed that it planned to enter administration, putting up to 100,000 jobs at risk. KPMG was appointed administrator to Peacocks. The chain was sold to the Edinburgh Woollen Mill Group, though 224 outlets were not sold to EWM, resulting in more than 3,000 immediate job losses.

=9. Focus (DIY), City Link (Courier) & Toys R Us (Toys)

3,000 jobs lost each

Focus DIY was a privately owned chain of DIY stores in the UK before its collapse in 2012; it served the consumer DIY market sector, and most stores had some form of garden centre. City Link was a British next day courier company, operating from 1969 to 2015. Toys R Us was an international toy and gift brand, which collapsed in 2018 when its private equity owners loaded the company up with $5 billion in long term loans, forcing the chain to spend more than $250 million on debt service alone. The downfall of each company cost the UK 3,000 jobs.


More news on

×
×
×
×