A series of takeovers and sell-offs will sweep the sports and leisurewear market as a result of the economic downturn, according to a new report from industry analyst Plimsoll Publishing.
The study has found that a combination of factors is forcing smaller companies to consider selling to bigger rivals, while larger players are looking to buy their smaller rivals to diversify and develop their businesses.
Says David Pattison, senior analyst at Plimsoll: “It has a great deal to do with necessity. Many of the larger players in the market, despite the downturn, are desperate to find new ways to develop their business, but with the current climate costs are being cut and business development is being slashed. So they need options to help them protect their futures and tap into existing revenue and profit streams.”
According to Pattison, financing a series of small acquisitions will give these companies two major benefits:
• A quick route to increasing sales at a relatively low cost
• A foothold in the emerging sectors of the market
For the last few years larger companies have been surviving on wafer-thin margins, most only making 4.4 per cent or less, while 60 of the UK’s top 682 players are actually losing money at the moment, says Plimsoll. Meanwhile at the other end of the market, a group of 132 smaller and highly focused companies are emerging. These fast-growing businesses have been able to carve out niche markets for themselves, some with premium profit margins. The best examples of these companies are:
• Reporting sales increases of well over 21 per cent per year
• Reporting margins of 4.4 per cent
However, despite the excellent returns many of these company’s owners are eager to sell. According to Plimsoll, several factors are at play here – a combination of the businesses reaching a critical point in their development, twinned with the tightening of credit and a reluctance of the money markets to finance the next phase of development. In today’s market, selling these businesses makes sense for two reasons:
• Brings the chance of stability and security to protect the business
• Accelerates the development of the company due to extra resources
Says Pattison: “It would be a pity if some of these exceptional businesses went to the wall, or do not get the maximum chance to prosper just through lack of funding.”
The Plimsoll Analysis – Sports & Leisure Wear identifies the companies most exposed to the downturn, those in pole position to prosper and those where the combination of poor performance and a slowing economy has exposed them as a cost-effective acquisition. It also includes a future snapshot on each company, demonstrating how each might survive this period of consolidation. It rates each company on their attractiveness as an acquisition and highlights the most attractive companies to buy in the sports and leisurewear sector.
The report is available at the discounted price of £350 by calling Clair Sherwood on 01642 626422 or emailing firstname.lastname@example.org