UK retail sales slumped 1.6 percent in November, the most in six months, according to the British Retail Consortium, as shoppers cut back on spending amid signs of recession. [Simon Dawson/Bloomberg]

LONDON - UK retail insolvencies may reach the highest level in four years as weak Christmas sales leave chains struggling to meet rent payments due this month, according to the restructuring firm AlixPartners LLP.

"We are likely to see a number of retail collapses early in the new year and it could include some much-loved names," said Sanjay Bailur, managing director of the advisory firm's UK unit. The outlook is "worse than the last three or four years".

A disappointing Christmas season may be the nail in the coffin for retailers who have been barely hanging on for years. Many in sectors such as value clothing, books, music, and toys "have lost their focus and have ended up with too many unprofitable stores, resulting in failed expansion plans, both domestically and overseas", Bailur said.

Thorntons PLC, a UK confectionery maker, fell the most in at least 22 years after saying annual profit will miss estimates. Earlier this week, HMV PLC, the UK's biggest CD and DVD retailer with more than 250 stores and 163.7 million pounds ($254 million) of debt, said that insufficient sales may cast "significant doubt" on its future. The outdoor clothing chain Blacks Leisure Group PLC put itself up for sale this month after its shares plunged 95 percent in 2011.

UK consumer confidence fell to the lowest level since the depths of the financial crisis in 2009, driven by concern about a financial recovery and the euro region debt crisis, according to the market research company GfK NOP Ltd. UK retail sales slumped 1.6 percent in November, the most in six months, according to the British Retail Consortium, as shoppers held out for discounts and cut back on festive spending amid warnings of a looming recession.

Quarterly rents, which UK chains pay three months in advance, are due on Dec 25 for the majority of retailers. Landlords and bank lenders anticipate that stores will have lucrative Christmas revenue by then, said Jonathan De Mello, head of retail consultancy at the property broker CB Richard Ellis Group Inc. Retailers who have had a tough Christmas may not survive, he said.

"The December quarter rent date will be a catalyst for a lot of the retailers," De Mello said. "It's a foregone conclusion in many respects that some retailers will pare down stores, some will go into CVA and some will potentially cease to exist entirely." A CVA is a company voluntary agreement, in which creditors are offered compensation in return for ending leases.

"It will definitely be as bad as 2008 in terms of store closures," he said.

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