Retail administrations fall to a four-year low

A total of 44 retailers, including names such as childrenswear chain Adams and fashion and homeware store Ethel Austin, called in administrators – the lowest for a single quarter since 2006 and 65 per cent down on a year earlier when the recession was biting hardest.

The more positive news follows figures from Ernst & Young, which showed profit warnings by UK companies fell to a 10-year low during the same period.

Administrations were six per cent down on the final three months of 2009 as retailers battened down the hatches for tougher trading conditions, but the outlook is "far from plain sailing", Deloitte warned.

Dan Butters, partner in the reorganisation services practice in the Leeds office, said: "The first quarter of 2009 saw exceptionally high levels of retail administrations and so it is not surprising to see a drop this time round. However, this period can be make-or-break time for struggling retailers so the scale of the decrease suggests that many retailers have been successful in taking the measures necessary to equip their business for tougher trading conditions. Indeed, we have seen an increasing acceptance of the use of CVAs (Company Voluntary Arrangements), and proactive steps to better manage cash flows."

He added: "While these figures appear to suggest an improvement in fortunes for the retail industry, the outlook is far from plain sailing.

"The UK consumer faces a number of reductions in their disposable income over the next 12-18 months and it is hard to imagine that measures to tackle the national debt will not impact them further. Retail sales are likely to remain broadly flat this year and probably next, while costs continue to increase. Growth will be hard to come by and further retail failures seem inevitable."