Retail insolvencies ease in June, but fashion sector remains on edge

The latest UK insolvency statistics offer a brief respite for retailers, though underlying pressures suggest the industry is far from out of danger. Company insolvencies in the retail trade fell to 169 in June 2025, a 12 per cent drop from May’s 192 cases and 17 per cent lower than the 203 recorded in June 2024, according to official data.

For fashion retailers, the decline provides momentary breathing space, but analysts warn it is unlikely to mark a turning point.

“Retailers enjoyed a positive month of trading in June, helped by the hot weather and the start of major sporting events and festivals, leading to fewer insolvencies than in prior periods,” noted Gordon Thomson, restructuring partner at RSM UK. “But how much longer will this good run last?”

The sector remains acutely exposed

A number of high street names have already sought formal restructuring processes in recent months, reflecting both the squeeze of rising costs and the difficulty of keeping pace with shifting consumer expectations. For some retailers, the failure to invest in business transformation, whether through supply chain resilience, digital channels, or adaptive store formats, has left balance sheets dangerously vulnerable.

Fashion, in particular, has felt the strain. Employment, Thomson observed, remains the single largest cost line for retailers, and job losses have become more pronounced. Hiring freezes may preserve short-term margins, but they come at the expense of customer service, a critical differentiator in apparel and luxury, where experience often drives spend as much as product.

The macroeconomic backdrop compounds the unease. The Chancellor’s autumn budget looms over the industry, with what Thomson described as “a significant fiscal black hole to fill.” Retailers are bracing for measures that could further tighten consumer sentiment at a time when households remain wary of discretionary outlays. The hoped-for “consumer-led recovery” has yet to materialise, despite relatively buoyant June sales.

Margins in fashion retail have always been narrow, but the combination of high labour costs, global supply chain fragility, and cautious consumer demand is stretching operators to breaking point. As the Golden Quarter, the critical period running from October through December, approaches, the industry faces a stark divide: agile businesses with strong product vision and market positioning may weather the storm, while weaker operators risk accelerated decline.

The dip in insolvency figures should be seen less as a recovery and more as a pause in what remains a highly volatile market. For those working in fashion, the lesson is clear: staying nimble, investing in new ideas, and running a tighter operation are now essential, not optional. With the all-important Golden Quarter approaching, the industry is walking a fine line, and without targeted government support in the upcoming budget, even well-run businesses could find themselves under pressure at the very moment they rely on sales the most.