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Recession costs sector £3.4billion

By: Jeff James

Listed Under: News

Published: Tuesday, January 05, 2010

The recession has cost the UK sports and leisurewear industry £3.4billion in lost profit in the past year, according to new research by market analyst Plimsoll.

David Pattison, senior analyst and author of the Plimsoll Analysis - Sports & Leisure Wear, says: “The recession has hit the sector hard, with more than half of the companies analysed in our new report making less profit than they were a year before. The bill in lost profits stands at £3.4 billion.

“With demand so subdued and the resultant competition, many companies are unable to charge the price they need to make healthy profit margins. In the absence of pricing power, many companies will have to make painful but necessary cutbacks in the next 12 month.”

However, the burden of lost profit is not being shared equally, according to Pattison. “393 companies have bore the brunt of the downturn,” he says. “These companies have seen their profit margins decimated, and in the absence of a big upturn in demand will have to cut their cloth accordingly. Watch out for further job losses and closures as these companies look to claw themselves back to profit next year. If they fail to act quickly they could find themselves running out of cash.”

But, says Pattison, there are still companies getting it right: “Amazingly, there are 104 companies that have maintained or increased their profit margins in the last year. All things considered, that’s a pretty good achievement. While some of these companies made cutbacks to match their lower sales expectations, others have managed the Holy Grail - they have grown their business and increased their profit margins in a recession. Those companies prove that an efficient business selling the right product to the right market can still succeed in the UK sports and leisurewear industry.”

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