BUSINESS LIVE: Levels of financial distress soar; Luxury brand value falls; S4 cheers easing costs

The FTSE 100 will open at 8am. Among the companies with reports and trading updates today are S4 Capital, Sainsbury’s and John Lewis. Read the Monday 22 January Business Live blog below.

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Around £43bn wiped off value of Europe’s biggest luxury fashion houses this year so far

Around £43billion has been wiped off the value of Europe’s biggest luxury houses this year so far.

The sector is grappling with a slowdown in demand from wealthy US and Chinese shoppers.

Of the five top luxury giants, including LVMH, Hermes, Kering, Moncler and Richemont, only the latter has not lost ground since the end of 2023.

Levels of financial distress soar

The number of British companies in ‘critical financial distress’ skyrocketed in the fourth quarter of 2023, with every sector of the economy affected, as firms struggle under mounting debt costs and lacklustre growth, new figures suggest.

Begbies Traynor’s Red Flag Alert report shows the second consecutive quarter of around 25 per cent growth in the number of firms in critical financial distress to 47,477.

Historically, a significant percentage of the businesses identified by Red Flag Alert as being in critical financial distress will enter insolvency over the course of the next year, the group said.

Julie Palmer, partner at Begbies Traynor, added:

‘After a difficult year for British businesses that was characterised by high interest rates, rampant inflation, weak consumer confidence and rising and unpredictable input costs, we are now seeing this perfect storm impacting every corner of the economy.

‘Now that the era of cheap money is firmly a thing of the past, hundreds of thousands of businesses in the UK, who loaded up on affordable debt during those halcyon days, are now coming to terms with the added burden this will have on their finances.

‘For some, a better-than-expected Christmas may kick these concerns down the road for a little longer, but the rapid growth in the levels of critical financial distress point to an economy that is waking up to the danger of debt ladened businesses in a higher rates environment.’