One in two companies in the UK sports and leisurewear industry are making a loss, according to new research from market analyst Plimsoll, with many finding it difficult to pass on rising costs to customers.
“Whether it’s fuel, materials or wage demands, every company in the UK sports and leisurewear industry is being squeezed by ever increasing costs,” says David Pattison, lead analyst and author of the Plimsoll analysis.
“Sixty six per cent of companies have seen their gross margin fall in the latest year.
“Unfortunately, many are reluctant to pass on price rises for fear of losing customers to cost savvy competitors.
“However, falling profit margins across the industry is the first warning sign that this strategy has become unsustainable.”
Pattison adds: “Over the past two years the average profit margin in the UK sports and leisurewear industry has fallen to two per cent.
“More worryingly, 236 companies are losing money, with 139 of these doing so for the second year running.
“These companies face a tough decision – protect their market share and continue to lose money or adjust their prices to reflect their increased costs.
“Without refocusing on the bottom line, many of these companies will simply run out of cash.”
However, the good news is that many companies are getting it right. Pattison claims: “194 companies have managed to actually increase their profit margins over the same period.
“In all, 349 companies have managed to stay in the black despite rising costs.
“Clearly, operating profitably in the UK sports and leisurewear industry is difficult but not, as yet, impossible.”
