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BREXIT: 'Challenging 12 months' ahead for retail as Store Twenty One approaches administration


The next 12 months will be "challenging" for UK retail businesses, as the effects of the UK's decision to leave the EU filter through to the wider economy, an expert has said.

Discount fashion retailer Store Twenty One is expected to enter into an insolvency process later this week, after its main lender State Bank of India said that it would not provide any further funding, according to press reports.

The business, which has around 125 stores throughout England and Wales is subject to a winding-up petition presented by HM Revenue and Customs (HMRC), after it failed to meet the terms of a company voluntary agreement (CVA) it arranged with creditors last year, according to City AM.

Insolvency law expert Andrew Robertson of Pinsent Masons, the law firm behind Out-Law.com, said that the UK retail sector was "coming under increasing pressure", with a number of high profile insolvencies already announced this year.

"The recent insolvencies of Jones Bootmaker and Jaeger are cases in point, and we expect to see further business failures this year," he said.

"The effects of the Brexit vote are now filtering through to the wider economy with consumer confidence falling and disposable income being squeezed. Couple this with the challenging landscape retail businesses face with rents going up, hikes in business rates and increasing labour and supplier costs due to the weaker pound and the national living wage, and it is apparent that the next 12 months will be challenging for the retail sector," he said.

Manufacturing and retail businesses are expected to be the worst impacted in the short term as a result of the on-going uncertainty caused by the UK's decision to leave the EU, according to a survey of UK insolvency professionals by Pinsent Masons at the end of last year. Over 62% of attendees at an industry conference hosted by the firm expect business failures to increase as a result of the Brexit vote.

Insolvency law expert Nick Pike of Pinsent Masons said previously that retail businesses were particularly vulnerable due to their reliance on the "discretionary spend" of consumers.

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