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One month into 2025 and the signs are already ominous for many UK businesses. Our own yearly distressed business list ballooned to over 200 big name brands at the end of last year, highlighting just how difficult economic conditions currently are for companies across all sectors.
Businesses looking to the autumn budget for some kind of help were left disappointed, as the new chancellor burdened them with the task of overturning a £40bn treasury deficit instead. The new measures include an increase in National Minimum Wage and National Insurance contributions for many employers.
With these upcoming changes in mind, it’s not a giant leap to imagine that many already in trouble may cease to trade completely by the end of the year. In fact, some have made noises to that effect already.
WH Smith
With 19 of its stores already scheduled for closure this year, WH Smith bosses have now decided to put the rest of their 500 stores up for sale.
While this may mark the end of WH Smith as we know it though, it’s unlikely to signal the end of the company itself. It may have seemed like the stationery store was plodding toward a slow decline, but in the background, they’ve been working on a successful pivot as a global travel retailer.
Their restructuring has seen them steadily build up over a thousand travel stores across 32 countries, with 85% of their trading profit now coming from this travel arm alone.
It will take a brave buyer to attempt to turn around their stationery stores. Perhaps a more attractive proposition for buyers would be the online card retailer, funkypigeon.com, which WH Smith owns, and may be up for grabs.
Sainsbury’s Cafes
One of the few supermarkets to already be paying above the forthcoming National Minimum Wage, Sainsbury’s will notice slightly less of a hit to their operating costs after April. Even so, the changes to National Insurance contributions will still take a sizeable chunk out of their profits.
As such, they’ve already made restructuring plans that are estimated to save them £1bn over the next three years. This restructure most notably involves the axing of their in-store cafes. 200 have already been culled, with the remaining 61 soon to be no more.
New Look
The fashion retailer, along with Sainsbury’s, were part of a 70-strong group of signatories that expressed their concerns over the budget measures to the Chancellor, Rachel Reeves.
Reports suggest that New Look chiefs have been prompted by the budget measures to accelerate their store closure plans. The Wickford branch has already closed, with 90 others said to be ‘at risk’ when their leases expire later this year.
Around 250 stores will still remain if these closures go through, but their eagerness to shut up their stores at the end of their leases doesn’t bode well for their other bricks and mortar stores moving forward.
Is your business looking over its shoulder?
If you think your business might struggle to continue in its current form during 2025, you need expert advice on how you can navigate the future.
We have specialists on hand that can help you to facilitate turnaround strategies, sell your business, or close down your company depending on the best route available to you. Call us on 0800 975 0380, or email advice@forbesburton.com for a free consultation.
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