One third of UK leather industry ‘now showing signs of recession’
According to a new survey produced by the UK market research organisation, Plimsoll Publishing, one third of the UK leather industry is now showing signs of recession.
The survey categories leather businesses into four distinct groups, in relation to how they perceive their current performance, as follows:
"I'm in a recession now"
71 or 31% of the total sample of 230 businesses, representing 100% of the industry, said they were losing market share and profitability. They were finding the market tight and had seen sales decline 19.4% on average over the previous year. 58% were ‘at high financial risk’, and had been unable to take advantage of the industry’s 3% growth rate. A high proportion of businesses belonging to this category were small.
"There is no recession"
64 or 28% of the respondents said they were showing no signs of recession at all. Compared with the industry average of 3%, the average growth rate of these businesses was an impressive 15.3%. Their average profit margin was 5.8% and a surprisingly high 34% perceived themselves to be at high financial risk.
"I'm preparing for the worst just in case"
25 companies or 11% of respondents said they were adopting a ‘steady’ approach with regard to profits and using these to pay off debts. Overall, debt within these companies had remained level, with profitability hovering around the 6.9% mark. The average sales growth of these businesses was 19.2%, with 32% perceiving themselves to be at high financial risk.
"I'll blast my way through"
70 companies or 30% of respondents said they are ‘going for it’ and striving for as much of the market as they could get. The average growth rate of these businesses was 11.4%. Like those companies most fearful of recession, all of these companies were on average loss makers and were characterised in the survey as being risk takers.
Plimsoll says the research suggests that recession should not be measured by industry(ies) as a whole. "To generalise on company performance seems outdated and flawed. Recession will be more accurately determined by individual companies. It is up to individuals as to what stance they have on the issue and what strategies they will take to ensure survival." says David Pattison, an analyst with the company.
