Chill Winds for 38 “Beached Whales” of the British High Street

Mark Halstead Data

Even multi-millions in turnover can be a prelude to serious financial distress. Our biggest High Street names – ‘The Whales’ of the retail ocean can be found stranded as the tide turns towards faster fashion models.   

Our inside sales manager, Nat is quite a snazzy dresser. In an idle moment she began looking through the Red Flag Alert platform, searching for her go-to premium high-street brands… just to check that they are in good financial health.

Quite the opposite!

What were the results?

Running a search, she looked the following criteria:

  • “big” brands – with a turnover last year of £30 million plus, deemed as whales
  • companies falling into our highest category of distress; 3 red flags AND
  • retail sectors using sub-SIC codes.

A search showed up some of the stalwarts of the British High Street.  In fact, if your idea of a good Saturday out involves browsing the racks of New Look or All Saints in a pair of Dune shoes, and flipping your debit card out of an LK Bennett handbag then you might want to look away now. You may also want to look away if you’re shopping outside your home town as Travelodge shows in this category too. Places that you might want to go for lunch may be limited; Leon, Bills, Pizza Hut and Pizza Express, Gusto and Itsu, as well as ‘The Restaurant Group’ favourites;  Wagamama, Frankie and Benny and Chiquitos.

What does this data tell us?

This is not to say that the automatic doors will immediately slam shut on your high street favourites. Companies of this size and pedigree often manage to trade through difficulties of this type via Voluntary Arrangements.  However, their supply chains stretch through the warehouses and workshops of this, and other countries.

One of the clothing retailers above has been trading since 1982 and has more than 10,000 staff… 10421 in fact. It is fair to say that such large companies, with their prominent positions in High Streets pose a challenge to the Government’s plan to ‘Build Back Better,’ post-pandemic, which focuses on the Government’s aims to support economic growth across the UK. The second point of their High Street Action Plan is that it ‘supports high street businesses.’ I’m sure those listed above would love to know how.

A Note on methods from the editors:

Search run 06/06/2022 on RFA platform using our proprietary data.

Definitions

3 Red flags “Companies are in the weakest 20% in their size category and display risk factors that might include a deteriorating financial position, sub-optimal gearing/liquidity, and/or the presence of more recent, or significant legal notices, but with additional risk factors, such as recent county court judgments of a materially significant value. Very high risk and guarantees advised, and 56% of companies with three red flags will cease to trade in the next seven days.”

Retailers – those whose primary function is;

47710: Retail sale of clothing in specialised stores
47710: Retail sale of clothing in specialised stores
47721: Retail sale of footwear in specialised stores
47721: Retail sale of footwear in specialised stores
47722: Retail sale of leather goods in specialised stores
47722: Retail sale of leather goods in specialised stores
47910: Retail sale via mail order houses or via Internet
47910: Retail sale via mail order houses or via Internet

Govt High St Policy

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1005041/Build_Back_Better_High_Streets.pdf

This strategy sets out the government’s plan for high streets and how high streets and town centres can adapt and thrive after the COVID-19 pandemic. It sets out government action across 5 areas:

  1. Breathing new life into empty buildings
  2. Supporting high street businesses
  3. Improving the public realm
  4. Creating safe and clean spaces
  5. Celebrating pride in local communities

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Mark Halstead Partner

Mark's experience is big data analytics, financial services and building businesses provides Red Flag Alert with strategic direction.