‘Gap yawns between sick and healthy’ in UK label market

The first snapshot of how the label market is changing as a result of the UK economic slowdown has just been released by industry analysts Plimsoll Publishing.

The findings suggest that the brunt of the slowdown is being felt by almost a quarter of the companies in the market. Surprisingly, over a third of those surveyed have been largely unaffected, maintaining their financial strength, margins and some managing to even increase sales. 

The study surveyed the UK’s top 383 label firms, based on their latest financial performance. Highlights extracted from the analysis show:

Market direction

Overall the market is showing no overall growth, compared to growth of almost 1 percent this time last year. However there is much changing amongst the players in the market as they jostle for precious sales, highlighted by the huge gap in performance. 

• 128 firms have seen their sales decline, some by as much as 12 percent

• 125 firms have seen their sales increase, some by as much as 15 percent

David Pattison, senior analyst at Plimsoll, explains the reasons behind the changing market: ‘The recession seems to have accelerated a shift in the market. Some companies have clearly been affected by those that have swapped to low cost alternatives or by the loss of a key client. Others are clearly benefiting from this move.’

Profitability

Overall profitability is slim, with most companies reporting profits of less than 1 percent. This is largely in line with last years figures as the early signs of recession were already taking an effect. However the gap between the very profitable and those missing out is widening.

• 202 firms have seen their profits fall, with one in three currently losing money

• 181 firms have increased profitability, some reporting margins of over 5 percent

David Pattison believes this is down to a number of factors: ‘The recession has been a good thing for a number of companies, it has sharpened their management and improved the accountability of the directors, so much so that these reorganizations are already leading to an increase in profitability. 

‘However for those that have yet to come to terms with this changing market, times are tough and they risk falling further behind the successful competition unless they respond to this changing market.’

Copies of the complete analysis are available to order by calling Clair Sherwood-Parkin on 44 (0)1642 626 422.

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