Retail Emerges as Most Distressed Sector in Europe, Report Says
(Bloomberg) – Weil is now the most troubled sector in Europe, according to Gotshal & Manges’s latest corporate distress in the region.
Retail and consumer goods companies suffer from weakly optional expenditures, margin compression and tightening credit conditions, which have been pushing the highest level since the global financial crisis in 2009. Since the company has published the report in the last April, the deterioration of Weil’s two -point skipping among the sectors in the European trouble index has been rapid.
Read: European retail shortage reaches the highest level of ten years in the midst of consumer gloom
“The sector has experienced a steep increase in distress in the last quarter,” the report said. “The uncertainty around the tariffs negatively affected the supply chains and the retailers who exported them to the USA.”
Retailers are not alone. According to Weil’s report, the corporate problem in Europe rose to its highest level in nine months in May, while seven of the ten industrial groups experienced worse conditions than the previous quarter. In the report, Germany continues to be the most troubled market among the countries.
In the report, companies worse in the midst of a challenging macroeconomic environment in Europe, with geopolitical uncertainty, trade tensions, conflicts in the Middle East and Ukraine, and variable financial markets. The total level of distress in the Weil index rose in seven of the last nine months.
The report defines distress as the uncertainty about the fundamental value, volatility and the increase in the perceived risk of financial assets. The common features of corporate problems, liquidity pressure, profitability reduced, increasing risk of bankruptcy, falling values and reduced investment return.
“This deepening retail shortage has become a bell for a wider trend: institutional distress throughout Europe, accelerated more sharply than expected at the beginning of the year,” he said.
(Adds details about the monthly distress rising in the fifth paragraph.)
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