We read 315,389 sets of accounts filed by 189,178 UK fashion companies. Among those filing enough detail to read inventory against revenue, 56% grew stock faster than reported revenue. Where the stock-to-sales ratio rose, 2.9% subsequently failed, against 1.7% where it held or fell.
That second figure is directional and nothing more. It rests on eleven failure events, and we report it as an ordering of risk rather than a prediction. The finding that matters more is what came before the failures. For Claire’s, Select Fashion and Missy Empire, the deterioration was visible in accounts that had been publicly available for eight to thirteen months. The information existed. It did not become a decision. Our new report works through why.
Slow stock costs margin long before it costs the business
Among emerging brands under £5m turnover, the fastest inventory turnover quartile ran a median operating margin of +1.5%. The slowest ran −16.3%. An eighteen point gap, on the same shelves, in the same market.
The markdown arithmetic explains it. On a £100 garment at 60% gross margin, a 30% discount cuts unit gross profit by half. A 50% discount cuts it by 83%. With sector operating margins in low single digits, a small shift in how much stock clears at markdown is enough to remove operating profit entirely.
The price of being wrong has gone up
The discounted share of the market rose five percentage points in 2024. England and Wales recorded 1,961 retail insolvencies in 2025. Employer National Insurance rose to 15% with a lower threshold, the National Living Wage reached £12.71, and retail business rates relief ended and was replaced by a narrower multiplier regime. From July 2026, large companies in the EU can no longer destroy unsold apparel.
Each of those lands on the margin that was supposed to absorb the markdown.
Risk sits where there is least room to be wrong
Days inventory is close to flat across the size bands. Roughly 116 days for emerging brands, 106 for the mid market, 117 for large. Smaller brands do not hold proportionally more stock. They hold it with no clearance estate, no outlet channel and no balance sheet slack.
Insolvency rates bear that out, and not in the direction usually assumed. In 2025 the highest failure rate sat with businesses employing 20 to 49 people, at 269 per 10,000, against 114 for micro businesses. Those figures cover the whole economy rather than fashion, so read them as context. But the pattern is consistent with what we see in the register: risk peaks in the scaling phase, where stock commitments outgrow the visibility and capital supporting them.
It stopped being a data problem some time ago
A buying cycle commits capital six to nine months ahead of the season. At the moment of commitment there is no sales data for the products concerned. Quantities, mix, allocation and markdown depth are judgement.
Judgement is not the weakness. The weakness is that reporting systems support it least at exactly that point. They mature after the decision they should have informed, they flag anomalies without weighing the trade-offs, and almost nobody reviews buys against outcomes in a structured way, so the same errors recur. Ted Baker shows the tail end of this: finished goods rose from £117m to £216m, and a £58m inventory overstatement followed. Once stock ages, even valuing it becomes judgement, and the reporting itself starts to degrade.
ASOS is the counterexample and the reason we included it. Inventory down 23% to £402.3m, adjusted gross margin up 370 basis points, adjusted EBITDA up £51.5m, all while revenue fell 15%. The exposure reaches the most data-rich operators in the market, and so does the profit available from correcting it.
What it means
After a decade of investment in reporting and analytics, imbalance persists. That tells you the constraint is not information. It is the distance between what a system describes and what a buyer has to commit to.
Closing it is a matter of decision intelligence, earlier demand signals and codified process. McKinsey’s fashion work associates AI-supported forecasting with inventory reductions of 5 to 15% and stock-out improvements of 15 to 25%. In a market forecast to grow 11% over five years, share goes to whoever decides best.
This is the same gap our maker research describes from the other side of the order. Retailers commit stock before they know demand. Makers commit capacity before they know the order. Decisions are where Coord works.
Read the full report
