According to the third quarter evaluation by PwC, retail businesses experienced a surge in insolvency. PwC also issued a warning of an impending rise in insolvencies within the retail and hospitality sectors in the early part of 2025 due to ongoing turbulence in these industries.
Notably, a quarter of all insolvencies registered in the current year are from the retail sector, as revealed by PwC’s quarterly insolvency gauge. Between July and September, 76 retail companies had gone insolvent, following 43 in both the first and second quarters. Thus, the overall figure of 162 ranks this sector as having the highest insolvency record for the year.
The total number of insolvencies across all sectors, as revealed by PwC, stood at 661 for the initial nine months of the year. This is a 35 percent increment from this same period in 2023 and an 86 percent rise from 2022. More than 900 insolvencies are expected by the end of the year.
In comparison to 2021, the prevailing insolvency rate of 32 per 10,000 firms represents over a 100 percent increase. However, it is still under the 20 years average of 50, and the record peak of 109 per 10,000 businesses in 2012.
The hospitality industry saw 110 insolvencies, accounting for 17 percent of all insolvencies up to the end of September 2024, leaving unpaid debts of approximately €37.2 million as per PwC’s findings.
There were 31 insolvencies in the hospitality sector in the third quarter, following 49 in Q1 and 30 in Q2. 98 percent of hospitality insolvencies in 2024 were liquidations. Despite the reduction in numbers, the hospitality industry remains heavily affected. The annual insolvency rate stands at 58 per 10,000 businesses, exceeding retail’s rate of 27 per 10,000.
In accordance with the latest financial reports, dissolved hospitality companies in the past 21 months have left an average debt of approximately €380,000 each, according to PwC. Forecasts suggest a substantial rise in hospitality company failures in the first quarter of 2025, matching previous patterns where companies manage to remain operational up till Christmas but endure difficulties in January. PwC foresees a parallel trend in the retail sector following the festive period, when companies determine their operations for the impending year.
Ken Tyrrell, a business recovery partner at PwC Ireland, warned that smaller companies in particular face formidable hurdles in the upcoming months. He cited relentless insolvencies against the backdrop of escalating business costs in Ireland in recent years, a stark deviation from the past historic lows. He indicated both the retail and hospitality sectors display markers of pressure, with the hope for a flourishing business environment leading up to Christmas, a season notably vital for both sectors.