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UK fashion retailers face billions in SS20 stock write-offs

By Huw Hughes

15 Apr 2020

Retail

UK clothing retailers are facing an enormous amount of SS20 write-offs as physical stores remain closed and warehouses fail to shift stock.

The British fashion market is worth around 55 billion pounds a year in sales, with 80 percent of that coming from physical stores and the remaining 20 percent from online. According to the Times, the three month period from March to June is estimated to account for around a third of sales, meaning around 18 billion pounds is at risk. Some of that stock is likely to be cleared through discounting.

'Spring-summer will be a write-off for most retailers'

Non-food sales are expected to fall in the region of 70 percent during lockdown, while more than 50 percent of non-food retailers could run out of cash within six months if they remain closed. That’s according to a new report from Retail Economics and Alvarez & Marsal.

“Spring-summer will be a write-off for most retailers and excess levels of stock will flood the market in June and July leading to significant discounting and margin erosion. Given that various clothing retailers were plagued with underlying issues prior to the pandemic, administrations will be inevitable,” the report said.

All ‘non-essential’ stores across the UK have been closed since March 23 as part of the government’s attempt to curb the spread of the coronavirus.

While many fashion retailers have continued to operate online, others like River Island, Moss Bros and Quiz have had to temporarily halt online operations.

Companies like Primark, which have no webstore, are also feeling the immediate effects of the lockdown. In March, the retailer warned it would lose 650 million pounds a month in sales due to store closures.

Photo credit: Pexels

Alvarez & Marsal
CORONAVIRUS
Retail Economics