Following a vote of confidence against the Prime Minister on 12 December, the possible effects of Brexit on businesses are once again up for discussion with the countdown clock at less than 100 days to go. With research suggesting over a third of businesses are underprepared for a hard Brexit, a joint statement from the five main business groups in the UK (British Chambers of Commerce, Confederation of British Industry, Engineering Employers’ Federation, Institute of Directors and Federation of Small Businesses) labels the continuing uncertainty a ‘significant drain’ on time and money as contingency plans are put in place.
Made.com and Joules are amongst those companies which have unveiled their post Brexit preparations, with measures including separate supply chains dedicated to UK and Europe exclusively, setting up European hubs and ramping currency hedging to protect against the volatility of the pound post Brexit.
More than 30,000 UK retailers are however reported to be in significant financial distress. British Property Federation boss Melanie Leech says the Government is too ‘tied up with Brexit’ leaving ‘very little headspace for these important domestic issues’. She called for reform for big retailers as well, referring to measures in the Chancellor’s budget to aid small businesses by slashing their business rates bill, without which she argues there will come a point when large firms can no longer bear the cost and it becomes unsustainable for them to continue trading.
This statement has come at the end of a bad month as Boxing Day sales fell for the third consecutive year with retailers such as Bonmarché putting out profit warnings in dire trading conditions which seem to even be spreading online. Fashion giants such as Asos and Boohoo saw share prices tumble by around 40% and 20% respectively, a loss of £1.3 billion in value in the former’s case. Brexit brakes on the spending trolley led to Sports Direct owner Mike Ashley describing November as ‘the worst on record’ and with more prediction of doom and gloom: this type of November ‘will literally smash retailers to pieces’. In addition, figures from the British Independent Retailers Association show a record high number of independent retail closures in the first half of 2018.
A piece of good news was to be found as High Streets Minister Jake Berry MP announced a £675 million fund to transform high streets following recommendations from retail expert Sir John Timpson.
In his address to a Commons select committee, Mike Ashley pointed out he is ‘not Father Christmas’ when questioned on how many House of Fraser stores could be kept open. This follows news that both House of Fraser’s Hull branch and Manchester’s iconic flagship Kendals store will remain open, saving over 600 jobs in the process.
Debenhams chairman Sir Ian Cheshire has issued an ultimatum to Mike Ashley telling him to make an official bid for the company or stay out of its affairs. This follows the rejection by Debenhams of Ashley’s offer of a £40 million loan to avert collapse.
Former BHS owner Dominic Chappell has been ordered to pay £124,000 for breaches of pension laws. The company was acquired by Chappell for £1 back in March 2015 from billionaire Sir Phillip Green and subsequently went into administration the following April leaving behind a £571 million pension deficit. Sir Philip has agreed to pay £363 million.
Music and film retailer HMV has collapsed into administration following a weak festive trading period. Executive chairman Paul McGowen says the business ‘has not been insulated from the general malaise of the UK high street’ suffering challenges resulting in increases to fixed costs such as ‘business rates and other government-centric policies’.