The Retail Sector in 2019

Quantuma's Managing Partner Carl Jackson takes a closer look at the retail sector

by Carl Jackson

Despite the unprecedented conditions on the high street, optimism has remained and has been demonstrated by the number of company voluntary arrangements (CVAs) in the sector in 2018.

This optimism has deteriorated as a number of high profile high street CVAs have failed and exposed the traditional retail model as broken.

In a recent statement from Mike Ashley at Sports Direct, revealing their half year results, he commented “Christmas shopping has been so bad for retailers that it “will literally smash them to pieces…November was the worst on record; unbelievably bad”. His comments on extremely poor sales in the period leading up to Christmas have since been echoed by other retailers and have sent the share prices of a number of major high street retailers spiralling into decline.

This should send out a stark warning to those high street retailers who are depending on good Christmas sales to boost their trading performance. Mr Ashley’s comments should come as no surprise with continued uncertainty on the outcome of the Brexit position and clearly consumers have chosen to tighten their belts with maybe half an eye on significant discounts in the January sales. With rental quarter dates looming at the end of the month and continued uncertainty heading into 2019 in both the UK and World economy, those retailers with weak balance sheets will need to be extremely careful about how they manage their businesses in the near future.

With just two weekends before Christmas, many retailers are already cutting prices to stimulate sales, fuelling fears of a spate of profit warnings and insolvencies in the new year.