More UK Retailers Hit The Dust

06 January 2009 - More UK retailers hit the dust

The entry for 29th December listed six retailers that had failed as a result of the credit crunch. Now we have more. Perhaps the saddest is Waterford Wedgwood which for 250 years has been making and selling fine china and glassware. Its demise is not solely due to the credit crisis but undoubtedly the consequential change in foreign exchange rates has played a big part. The business had about 40% of its sales invoiced in dollars whilst most of its purchases were in either pounds or euros. A horrible squeeze. Another casualty has been USC, a designer clothing chain and a third, albeit much smaller retailer called Passion for Perfume, has also gone under. This list will grow.

The crisis that this diary was spawned to cover started with unprecedented falls in the share price of erstwhile top high-street banks. One swift reaction was to ban "short-selling", the practice of "borrowing shares" in companies expected to suffer a fall in their share price in the hope of making a quick profit by the time the borrower is contractually required to actually buy the shares. The ban was imposed in September 08 and covered the shares in 32 financial companies. It will cease after January 16th. Disclosure of short selling will continue until at least June 09. The stated reason for withdrawing the ban is that it had little if any effect in either curbing price falls or in reducing share price volatility.