Bloodbath on High St
Mothercare, Carpetright New Look and Moss Bros facing a battle for survival
THE crisis engulfing the High Street deepened yesterday, with four more famous names fighting for survival.
The futures of Mothercare, New Look, Moss Bros and Carpetright look uncertain after swathes of store closures and financial warnings were announced.
Thousands of jobs are at risk as traditional retailers struggle to stay afloat amid changing shopping habits and a slowdown in consumer spending. Toys R Us and Maplin have already collapsed into administration, threatening more than 5,000 jobs. US company Claire’s Accessories has also filed for bankruptcy across the Atlantic, putting at risk its British stores.
Experts warned brick-and-mortar retailers were not doing enough to stand out from online competitors such as Amazon – which this week overtook Google to become the world’s second largest public company by value. Natalie Berg, an analyst at NBK Retail, said: ‘Retailers today need to be performing at the top of their game. Sadly, too many are either unable or unwilling to change and are at risk of signing their own death warrant.
‘The scale and pace of the changes we are witnessing is unparalleled – there will be no second chances for retailers that fail to adapt.’
Yesterday fashion chain New Look said it would close 60 of its 583 UK stores, at a cost of 980 jobs, as it tries to cut costs and attract customers. It is also trying to secure rent reductions at hundreds of outlets.
The firm has struggled since a questionable move by its former chief executive to target younger shoppers left core customers feeling alienated. Prospects for Carpetright looked equally poor as it revealed store closures after asking one of its shareholders for a £12.5million emergency loan. Chief executive Wilf Walsh attacked its previous owners for an ‘aggressive store opening strategy’, which had left it with an ‘ oversized property estate’ and ‘unsustainable’ rents. Mothercare, which has 151 UK stores, remained locked in talks with lenders to secure the cash it needs to survive.
The children’s clothing firm has rolled from one crisis to another as it struggles to compete with online retailers and more fashionable rivals such as Boden. And formal clothing chain Moss Bros saw its shares slump by 23 per cent after warning its profits for the year were likely to be ‘materially lower’ than expected. The company revealed a shortage of stock had caused sales to slump.
Department stores House of Fraser, Debenhams and Marks & Spencer are either reducing the size of shops or closing them as they try to adapt to changing shopping habits.
Eric Benedict, of consulting firm Alixpartners, said the High Street was being hit by a ‘toxic cocktail’ of rising rents, business rates and living wage costs. He added: ‘The situation with New Look is the latest indication of significant changes sweeping down the High Street. High streets up and down the UK will look markedly different in the years ahead with new players coming in, particularly value-based retailers.’
However, ETX Capital analyst Neil Wilson believes the High Street ‘is not dead’ but going through a ‘regenerative phase’. He said: ‘It’s a bad day for sure but these are all firms we’ve known for a while have struggled – it looks like clear split between those troubled and those surviving.’
‘Pace of change is unparalleled’