British high streets have suffered their worst week since the collapse of BHS in 2016, with nearly 9,000 job losses in retail and restaurants and thousands more put at risk.
The discount chain Poundstretcher is close to shutting down nearly half its stores in six weeks’ time, with the likely loss of 2,000 jobs, after landlords and other creditors approved a rescue restructuring on Friday.
The upmarket burger chain Byron, which employs 1,200 at 51 restaurants and French-inspired eatery Bistrot Pierre, which has about 25 outlets and employs as many as 900 people, on Friday both filed legal documents warning they could collapse into administration within the next 10 days.
The Scottish retail chain M&Co, fashion retailer New Look and diner chains , Prezzo, Wasabi and Azzurri, the owner of Ask and Zizzi, are also under threat as they urgently seek new investment or big rent cuts from landlords.
Businesses are struggling after weeks of closure during the high street lockdown and ahead of the unwinding of the government’s furlough scheme designed to protect jobs.
According to the Centre for Retail Research more than 24,000 jobs have already been shed in the first half of this year, well ahead of the number of jobs affected by insolvencies during the whole of 2019.
The CRR calculates that a further 32,000 jobs are at risk at larger retailers that have already started an insolvency process.
A further 15,300 are thought to have been lost at small high street businesses in the last six months.
Professor Joshua Bamfield, director at the CRR, warned these losses were the tip of the iceberg as the government’s job protection scheme begins to wind down from next month and its ban on landlords ending leases ended in September.
“The second half of the year could be disastrous for high streets,” he said.
The potential job losses come after a horrendous week in which about 9,000 jobs were lost at retail and hospitality groups.
The furniture retailer Harveys, shirt maker TM Lewin and Casual Dining Group, the owner of Café Rouge and Bella Italia, all called in administrators while SSP, the owner of Upper Crust and hundreds of other railway station and airport eateries, as well as Harrods and the Topshop owner, Arcadia, all announced hundreds of job cuts.
Their problems are not all the result of the coronovirus. Even before the high street lockdown, more than a fifth of retail and hospitality businesses – 29,108 – were classed as “zombie companies” by Company Watch. These are firms that have more debts than assets.
Nick Hood at Company Watch said: “The situation is going to deteriorate unless there is an unexpected miracle on consumer spending.”
That miracle currently doesn’t appear likely. Two weeks after clothing stores, shoe shops, toy retailers and other ‘non-essential’ high street chains opened their doors, the number of shoppers out and about was still only half that of a year ago, according to according to advisory firm BDO.
Sales at established physical stores dived nearly 57% in the week to 30 June against the same week last year as shoppers continued to prefer online shopping rather than a return to high streets, shopping centres and retail parks, the firm’s survey of small and medium sized retailers found.
Online sales surged by just over three-quarters, but that was not enough to offset the loss of store sales so that overall retailers took nearly 16% less than the same week last year.
Poundstretcher, founded in 1981 as one of the UK’s first discounters, has agreed to pay rent on 253 stores for six weeks but warned landlords that the outlets could close after that if new deals could not be agreed. A further 23 stores owned by a company directly linked to Poundstretcher may also close as the division is expected to be put into administration next week.
Rents at the cut price chain will be slashed by up to 40% on 84 stores and held at current rates on 94 stores under the insolvency process known as a company voluntary arrangement (CVA) approved late on Thursday night.
Will Wright, a restructuring partner at KPMG and joint supervisor of the CVA, said: “The approval of the CVA provides a stable platform from which the company can continue to operate across a more focused store portfolio.”
