There are fears that other high-street retailers could follow Toys R Us and Maplin into financial crisis as City analysts warned that the gloom engulfing the sector was likely to persist.
Shares in Mothercare lost more than 12% of their value yesterday after falling heavily the previous day, and Next and Debenhams both suffered falls after Toys R Us, the American toy company, and Maplin, the electrical goods retailer, went into administration on Wednesday.
As Carpetright added to the sector’s woes with an unscheduled profit warning, analysts said that systemic challenges were facing the sector.
One market analyst said that Mothercare “had all the hallmarks of Toys R Us”, which had more than 100 stores nationwide employing about 3,200 people when it fell into administration after a prolonged struggle with declining sales fuelled, in part, by online competitors such as Amazon.
The Guardian reports that New Look wants its landlords to slash store rents by up 60% as part of a rescue plan drawn up by the loss-making retailer to tackle its £1.2bn debt.
The fashion chain is seeking a company voluntary arrangement (CVA), a legal agreement which would enable it to jettison loss-making stores and agree rent reductions with landlords.
The FT offers an analysis of fragile and exposed retailers in a cold climate, citing analysts who say a rise in insolvencies and restructuring are a sign of a deteriorating outlook.
Click here for the full Times article (£)
