On 4th January in this blog, I said that we were likely to see high street retailers getting into financial difficulty in the first quarter of 2008. 19 days later, Dolcis , the shoe retailer, called in the administrators. Other shoe retailers are struggling with difficult trading conditions.For some, like Faith Footwear that lost 12 million in 2006/2007 fiscal years, and Stead and Simpson,  who ran up losses of over 3 milion in 2006, the future looks very tough. Clothing retailers will also continue to operate in harsh trading conditions until consumer confidence returns. The turbulent stock markets this year and talk of US recession is now making the man on the street very jittery.

I don't know about you but right now, I'd like to see the return of those scouser Harry Enfield characters- you know, the ones that used to continuously  say  "calm down calm down!!"    

January 23, 2008 | Permalink | Comments (0) | TrackBacks (0)

Companies House has seen a significant increase in new business incorporations in the last two years. Around 800, 000 to be exact. But as an any credit analyst will tell you, the majority of companies that fail  do so in their first two years of existence. So for a large number of new companies, the economic downturn and credit crunch have come at exactly the wrong time. Graydon will be keeping its eye on the liquidation statistics as they roll out through the year, and check to see just how many of the failures are newly incorporated concerns. Our assessment of the situation is that 2008 is not a good time to be young!! 

January 22, 2008 | Permalink | Comments (0) | TrackBacks (0)

While the US sub prime mortgage fiasco unravels still further, the rest of us can begin to reflect on who the biggest losers will be in the final reckoning.Merrill Lynch or Citigroup with their billion dollar writedowns? More parochially, maybe Northern Rock? However, I read the other day a news report from the USA about the spiralling number of house evictions and foreclosures that are ruining peoples' lives and devastating whole cities and neighbourhoods across Amercia. Foreclosures are currently around the 1 million mark- that's an awful lot of people soon to be without a roof over their head!! Apparently, in poor industrial cities like Cleveland, 1 in 10 homes are sitting empty, abandoned and in many cases now vandalised.

In human terms, my vote for biggest losers has to go to those high credit risk people who listened to the TV  ads and mortgage companies and believed it was right to take out a loan without fully understanding the risks involved.

I told Sam, a business friend of mine ,recently about a company director who complained to Graydon about the low credit rating  we were giving his business.Sam said " Instead of complaining,he should be thanking you for helping him not to over extend his business when it clearly wasn't equipped to deal with it".

Boy, I thought, the US sub prime mortgage business could have done with a few more Sams!! 

January 21, 2008 | Permalink | Comments (0) | TrackBacks (0)

The BDO Stoy Hayward Annual report on Fraud released recently predicts that the credit crunch will force many business people, out of sheer desperation, into fraud. Well, individuals "cooking the books" to improve results or hoodwink suppliers etc may be one outcome from the economic slowdown caused by the credit crisis, but I wonder just how many of us would be prepared to resort to crime in these circumstances? The credit crunch may well result in growing numbers of company failures, slower trade payments, reduced sales turnover.............but I'm not sure about it being ultimately responsible for filling up our overcrowded jails still further with white collar criminals.Mind you, with the police generally showing little interest in corporate fraud, maybe that will never be a issue!!

January 16, 2008 | Permalink | Comments (0) | TrackBacks (0)

Well well well,I never thought it would happen, but it is! German incorporated companies (GMBH types) are filing their balance sheets with the authorities in droves  to make them available to the public.Since 1988 GMBHs (equivalent of limited companies)were supposed to file balance sheets every year in accordance with EU company law in line with that in the UK and other European countries. however, about 85% of them just ignored the law, much to the irritation of export credit managers around the world who had to make credit decisions on german clients without good financial data. However, under pressure from Brussels, the authorities have apparently imposed a much larger fine for non filing in recent months. My understanding is that in the last week of december 2007, 70,000 balance sheets were lodged, and a further 430, 000 are expected in the first week of January. these should eventually find their way into german credit reports.Good news for everyone!!!

January 11, 2008 | Permalink | Comments (0) | TrackBacks (0)

The next few months will be make or break time for some UK retailers, so trade creditors to the sector should be on their guard. By all accounts, many gift-centric retailers are already reporting disappointing  pre Christmas sales, but it's after Christmas when the crunch really comes. Calls on cash from the VATman, trade suppliers and 1st quarter rent charges all come into play before the end of the first quarter. Combine this with an ongoing slowdown in consumer spending because of the credit crunch, and worried banks looking at whether they want to lend any more to retailers in trouble, and you can see why some businesses will undoubtedly go to the wall before Easter.

It's not all doom and gloom however. It's good to see John Lewis reporting healthy Christmas sales, in store and via the internet. And from personal experience, I can say Waitrose provided my family with some scrumptious nosh over the Christmas and New Year, which I'm still recovering from!!

January 4, 2008 | Permalink | Comments (0) | TrackBacks (0)