UK leather industry increases debt levels
According to a study by research company Plimsoll, almost half the companies in the UK leather industry increased their levels of debt last year. Plimsoll examined the strategies pursued by leather businesses and found that more than half (58%) of those companies that raised their debt used the money to expand to capture greater market share.
These companies are described in Plimsoll’s report as 'chancers', or risk-takers. Other companies in the leather analysis are also considered and named with 104 shown as having a losing strategy, 104 named as winners and 96 described as the sleepers of the industry. By examining the relative performance of companies in these categories compared to the norm in the industry, Plimsoll claims to have established how successful or otherwise each strategy is.
The evidence suggests that gambling on expansion has paid off. The group of ‘chancers’ has grown at a dramatic rate over the last year: over eight times the average for the industry, and enjoyed pre-tax profit margins of 2.7%, slightly higher than the industry norm of 2.1%.
