Several fashion companies in bankruptcy - even more to wait

When customers fail and margins are small, it does not take long before the economy crashes and bankruptcy is a fact. The latest in the line is the fashion company Lund Fashion, which includes the Flash and Dea Axelssons brands. This bankruptcy affects 95 stores in Sweden, three in Denmark and office and warehouse operations with a total of 500 employees.

The business and credit information company UC has mainly noted an increase in the number of bankruptcies in the hotel and restaurant industry during the first weeks of March. Between March 1 and March 20 this year, there are approximately as many bankruptcies in the hotel and restaurant industry as in the entire March 2019 and UC's Richard Damberg warns of a bankruptcy wave.

"There are still small numbers, but we see an indication that bankruptcies are increasing and we think this is just a beginning," says Richard Damberg.

He believes that what is seen in the statistics is a "corona effect". Especially in the restaurant industry there are many small business owners with small buffers, if any.

- The companies that go bankrupt are often small, have few employees and have small margins. There has been a rapid loss of sales of 70-80 per cent and then it is very difficult to survive for many of them, says Richard Damberg, who predicts a devastating exclusion in the industry.

UC's forecast is that the number of bankruptcies in the hotel and restaurant industry will increase by 57 percent in March 2020 compared to March 2019.

According to UC, it is too early for other industries to see a development.

- We see no increase in other industries yet, but everyone is talking about notice and there will be an increase in bankruptcies there too, says Richard Damberg.

He mentions the previously hard-pressed retail sector where there are also signals that companies are bleeding.

In addition to Lund Fashion, the fashion group Venue Retail Group, including the Rizzo shoe chain, was filed for bankruptcy on Monday. Both companies point out that the corona crisis has become a non-manageable economic blow. Polarn O. Pyret and Brothers will undergo corporate restructuring, also because the financial problems have become acute due to the corona crisis.

- Those who do not have muscle when they enter the corona crisis will have a really tough time because the landlords often lie still with the rents and the margins are still low, says Richard Damberg.