‘Sales for vanity, profit is sanity’ say analysts

The Plimsoll Analysis-Labels, published in June, prompted a backlash in the UK label industry. Having found that a record number of label companies are on the danger list, 979 jobs could go, and up to a third of labels firms are at risk of failure under a prolonged slow down in the UK economy, the news was hardly welcome. In response to this, Plimsoll has produced an updated study to incorporate the very latest figures and bring the picture right up to date.

Feedback Plimsoll received from the original publication was that in general, companies were not experiencing too much difficulty in retaining sales. This is borne out in the updated analysis that puts current market growth at a respectable 5 percent. Note however this is down from the previous year’s 7 percent. 351 of the 500 companies analyzed are holding or increasing sales on last year.

However this headline hides some worrying trends:

? 32 percent of companies are currently selling at a loss
? 44 percent of the 500 companies are making less profit than last year
? Despite the alleged slow down in lending, 24 percent of companies are in more debt now than they were 12 months ago
? 94 companies are currently rated as a high risk of failure in this updated analysis

Clearly whilst sales in the market continue to grow, albeit at a slower pace than last year, this buoyancy is distracting some directors from other areas of the business which require urgent attention.

David Pattison, senior analyst on the project, comments on economic trends in the UK labels market: ‘The reality is, sales teams are very rarely privy to the full picture. All too often, they are unaware of the costs of overheads, the levels of debt and how their sales add up in profitability. The latest figures do seem to suggest that the focus has switched from profit to sales, as companies grab business almost at any cost! The old adage has never been more apt, ‘sales for vanity- profit is sanity.’ 

Pattison continued: ‘The Plimsoll Analysis is a tool for measuring the current economic risks, as it allows companies to understand their market and their competitors better. In such stretched economic conditions, companies need to assess and understand who is a long term threat in the market and which companies are following an unsustainable strategy. This knowledge could be the difference between spotting a potential acquisition at a bargain price- and becoming one.’

The full updated Plimsoll analysis allows you to see how the UK’s top 500 label companies will cope with this unkind market.

This special edition of the Plimsoll Analysis- Labels exposes all the names, details and financial performances of the UK’s leading label firms. It also includes a future snapshot on each company demonstrating how each might survive this period of consolidation. It names those companies that are placed to gain the most and those that need to retreat or sell up.