Partner Article

Retailers face quarter day rent pressures, says BDO

Retailers will reach a tipping point this week as they prepare for quarter day rental payments, according to advisory firm BDO.

Business and restructuring expert, Phil Emmerson, from BDO has warned that the final rent payment before Christmas will put many leaseholders under financial stress.

BDO said previous quarter days had forced retailers such as Habitat, Jane Norman and TJ Hughes into administration, as businesses pre-pay the final three months rent of the year and risk potential insolvency.

Mr Emmerson said: “While some retailers have moved to monthly payments, the quarter day still remains a hurdle for many companies’ cash flow.

“Retailers have had another tough and testing year, and Q4 sales and the January sales are critical for the vast majority.

“They have a hard task in finding ways to encourage people to spend money with them rather than their rivals, and this comes down to offering them what they want, new products and value underpinned by superior service.”

BDO also warned that landlords would face pressure from rising vacancies as companies leave premises.

Debates over moving to monthly payments are ongoing between landlords and tenants, as businesses look for more flexible solutions to financial issues.

Mr Emmerson conluded:“Given the current trading environment and enlarged vacancy rates, negotiations are likely to come to a head.

“Retailers will be calling for more flexible arrangements that will not only be in the interest of the high street but for landlords too who cannot afford to see more retail space on the market.”

This was posted in Bdaily's Members' News section by Miranda Dobson .