UK:A quarter of large retail suppliers in danger
RetailGazette.co.uk - Apr 11th 2012, 08:47
UK manufacturing is under immense pressure according to research out this week which shows 25 per cent of the major manufacturers for the retail sector are struggling to survive.
Corporate health monitoring specialist Company Watch has put 173 out of the 681 largest UK food, non-alcoholic beverage and clothing manufactures in its Warning Area, meaning their overall health ratings are below 26 out of 100.
Key suppliers to the retail sector such as Premier Foods, owner of the Hovis, Mr Kipling and Oxo brands, and Dairy Crest, which makes Catherdal City Cheese & Clover spreads, are among those in danger
According to Company Watch many of these manufacturers having adequate level of profitability but their balance sheets are weakened by intangible assets which will make them vulnerable if margins are squeezed and profits dry up.
Nick Hood, Head of External Affairs at Company Watch, said: “Our survey highlights the problems facing retail suppliers. They, like the retailers themselves, are suffering a knock on effect from a fall in consumer confidence and reduced disposable incomes of shoppers.
“At a time when like-for-like sales are falling and consumers are demanding ever more value for money through deep discounts, retailers are inevitably making most suppliers share the pain.”
Figures published by government body the Office of National Statistics last week revealed that UK manufacturing output fell by one per cent during February, an unexpected decline which represents the worst outcome for ten months.
Today’s report from Company Watch only analysed a period up until early 2011, meaning upward input costs from rising energy and commodity prices are not yet fully reflected in the figures and things are likely to get even bleaker for manufacturers in the months ahead.
Over the last 14 years one in four of the firms which have been placed into Company Watch’s Warning Area have gone on to either file for administration or conduct a major restructuring of their business.
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