Fears for troubled High St stores as fashion chain axes 150 jobs

THE High Street could face a wave of closures next year following the fall of fashion chain American Apparel, experts warn.

Rising costs and fierce competition have created a ‘perfect storm’ that could see some retailers go under within months.

Administrators yesterday closed all but one of American Apparel’s 13 stores in Britain, with the loss of 147 jobs.

It came six weeks after the company went into administration, blaming tough trading conditions in the UK and US.

Retailers make 40pc of annual profit between October and December, but this year they have been slashing prices to bring in shoppers.

Retail expert Richard Hyman said factors such as looming rental payments, wage increases and the apprenticeship levy would push some retailers out of business.

He added: ‘This is the most pressured retail market we have ever seen. The reality is it’s very, very tough and something has to give.’

Julie Palmer, partner and retail expert at Begbies Traynor, said: ‘Smaller to medium-sized retailers are struggling – it is a little bit of a perfect storm – things such as wage rises are really starting to affect them.

‘For the bigger retailers it is easier – they can hit things like staff bonuses, but for the smaller retailers with less staff it is more difficult for them to do that.’

Many retailers may have miscalculated by offering heavy discounts in the runup to Christmas, eroding margins and confidence in the brand in exchange for short-term sales volumes.

‘I think the people who have been discounting for weeks are the people who are going to have less good Christmases,’ Hyman said.

‘When you are discounting heavily you are really sending customers a pretty negative message. You are devaluing your product.’

He tipped firms such as Ted Baker, Next and Jigsaw to come out on top, saying they had focused on their core markets rather trying to lure customers from rivals.