As Christmas decorations begin to go up in the shops, new research has found that the proportion of North East retail businesses with a higher than normal risk of insolvency has steadied in the third quarter of the year.
After increasing significantly from 31% at the end of 2017 to 40% in June, the latest data from insolvency and restructuring trade body R3 has shown that it had risen by just a single further percentage point by September, and that it actually dropped marginally during that month.
And despite the ongoing difficulties affecting the High Street, the R3 research also found a net increase of 80 retail businesses across the North East over the same three month period.
The North East retail sector, along with the region’s professional services sector, is one of just two of the 11 key industries that R3 monitors to currently have a larger proportion of companies at higher than normal risk of insolvency when compared with the national average.
Seven of these regional industries are faring better than the national average, with the remaining two performing roughly in line with it.
The North East pub and restaurant sectors currently have the lowest proportion of companies at higher than normal insolvency risk of any region in the UK, while the hotel and agriculture sectors are in second place in their respective lists.
R3’s insolvency risk tracker is compiled using Bureau van Dijk’s ‘Fame’ database and measures companies’ balances sheets, director track records and other information to work out their likelihood of survival over the next 12 months.
Andrew Haslam, chair of R3 in the North East and head of specialist business advisory firm FRP Advisory LLP’s Newcastle office, says: “The final quarter of the year is the most important and potentially lucrative period for retail businesses, and while no-one is suggesting that things will be easy in the run-up to Christmas, our retailers will doubtless take any positive news that they can get.
“Even though a number of well-known firms have disappeared from the High Street in recent months, along with many other less high-profile retailers, the overall increase in the number of active North East retail businesses shows there are still entrepreneurs out there who believe in the concepts that they’re bringing to market.
“The region’s leisure industries are continuing to lead the way, and it’s reasonable to expect, with the party season about to get into full swing, that the North East’s pubs and restaurants can expect a boost to their turnovers.
“As we’re sadly continuing to see, operational problems can hit any firm at any time, no matter how new or well established they are, and owner/managers need to be ready to act fast to give themselves the widest range of options for putting things back on an even keel.”