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Plimsoll Crisis Report: Staff Uniforms & Corporate Wear

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Welcome to the Plimsoll Crisis Report, prepared by Plimsoll Publishing Ltd. May 2020.

It has been an unprecedented time for anyone running a business in the UK Staff Uniforms & Corporate Wear market. The business environment that most of us have taken for granted throughout our working lives has been completely turned on its head.

Now is the time you must keep a focus on what is happening around you and, perhaps most importantly, what happens next.

To help you monitor the key developments in the Staff Uniforms & Corporate Wear market and plan for what is likely to happen when the pandemic abates, we have produced this special Plimsoll Crisis Report. This concise report examines the state of play before the virus, what to expect next and thecompanies of note on a number of KPI’s including:

• Sales Growth
• Profitability
• Productivity
• Overall Financial Health

Used in conjunction with your online Plimsoll Analysis, you will be able to keep one step ahead of the rest. Remember, your analysis is continuously updated so you have the latest view of the winners and losers plus the key trends shaping your industry.

Sales Growth

Annual sales growth in the UK Staff Uniforms & Corporate Wear industry had already fallen to 5% in the latest year compared to 12 months previous. Only 94 of the leading firms in the market were growing prior to the arrival of COVID-19 in the United Kingdom. Perhaps more worrying is the fact that 65 companies were in decline in the same period.

What impact has COVID-19 had on demand in the UK Staff Uniforms & Corporate Wear industry, which companies are likely to be most affected and where are sales heading in recovery?

What sales to expect

Pacing your return will be the challenge as the recovery will not be instant or constant. Ramping up at the right rate will be important. Bringing staff back gradually might be an option.

How much of the market will return and what will be lost is the key question? Many of your competitors will see the current uncertainty and the looming restart as an opportunity to take quick market share from the distressed, failed, or slow starters elsewhere in the industry.

We anticipate that a group of 94 firms with a history of aggressive sales growth will lead this return, looking to capitalise quickly and capture market share. They did it before and they will likely achieve high growth as the economy begins to heal and demand returns.

Many of these firms are large. 12 of the fast-growing firms have sales above £10 million. Their growth strategy will be helped by a series of acquisitions or snap up deals as the industry inevitably consolidates.

We have spotted a group of companies that are ripe for takeover in the post virus Staff Uniforms & Corporate Wear industry. Watch out for news on these companies in the coming months.

What can we learn from before the virus?

On average, sales growth was falling before the economic turmoil hit the UK market. Average growth was down to 5%. This also masked a huge discrepancy between different profiles of companies.

Differences by company size

In a classic case of David v Goliath, small companies were worst affected even before the lockdown. Using their economies of scale and relative size power, the largest were way ahead of their smaller counterparts. See table overleaf:

Size of companyNo of cosPrevious Growth %Latest Growth %
Less than £1 million12201
£1-2 million5734
£2 to 5 million3131
£5-10 million2344
£10 -50 million2577
Over £50 million965
Total26875

Who was taking market share?

It was clear that 94 innovators were grabbing all the growth, averaging 25% last year. Their success was having a big impact on the rest of the industry. Unfortunately, where there are winners there must be losers and 65 have been most affected by the success of their peers. This group of companies have seen their market share in decline before the virus.

Market shareNumber of 
Co.’s
Average
Growth
Market share
Previous
Market share
latest
Growing firms9425%2225
Static Firms650%6867
Shrinking firms109-16%108

Profitability

Pre-tax profit margins in the UK Staff Uniforms & Corporate Wear industry are up to 4% in the latest year. Of the 268 companies surveyed in the Crisis Report, 66 were making a loss for the second consecutive year before the crisis hit. These companies must be running short of money in the current climate.

Although 202 other companies continue to the be the profit kings of the UK Staff Uniforms & Corporate Wear industry, the impact that coronavirus has had on their outstanding margins is going to be significant. The impact it will have had on companies struggling to make a profit before the crisis is likely to be devastating.

What to expect on profitability?

Profitability has been a long-standing problem in the Staff Uniforms & Corporate Wear industry, so although crisis impact is likely to be deep, we are convinced profits will improve because of it. There are four reasons that lead us to this conclusion:

Cost control

Costs have been scrutinised like never before. How many furloughed staff do you really need to bring back online, why do you have such bad debts and which processes need to be put in place to ensure your ongoing profits are protected?

Less competition

Unfortunately, a reduction of competition is an inevitable consequence of a rapid economic downturn. We have seen in other industries that failure of a rival can bring great reward to those left by freeing up space in the market.

Smaller is better

There will be a realisation that you can actually sell less and make more money. Firms are testing various survival plans and may find that cutting out unprofitable parts of your sales or marketing will deliver better returns.

Raising finance

Despite the publicity, raising finance will not be easy and will require many of the normal application restrictions. Firms will need to act fast to ensure losses are kept to a minimum and less finance is required.

If you can get through these next few months and get your business on a more robust cost base, then the prospect looks good and your profits can improve as a result.

What can we learn from before the virus?

It’s clear that profitability will take the biggest hit in the coming months. Even before the crisis profits were slim for a lot of Staff Uniforms & Corporate Wear firms, with margins averaging only 4%.

The following shows the breakdown of profitability by company size:

Size of companyNo of cosPrevious Margin %Latest Margin %
Less than £1 million12201
£1-2 million5734
£2 to 5 million3131
£5-10 million2344
£10 -50 million2577
Over £50 million965
Total26844

Who was making the most profit?

202 firms were prospering despite the pressure in the market, making impressive 4% margins. There is a great deal to learn from these firms and how they are able to make more profit than the rest.

ProfitabilityNo of CosPrevious marginLatest margin
Profitable2022%4%
Loss making660%-3%
Overall2684%4%

Productivity

It is well chronicled that productivity has needed to improve in the UK economy and we lag far behind many rival countries – and the UK Staff Uniforms & Corporate Wear market is no exception.

Before COVID-19 the average sales per employee within the market has gone from £133,000 from £117,000 a year previous. The current period, with so many employees furloughed, is a unique opportunity reassess which roles are mission critical and what excess capacity you had in your business.

As lockdown is gradually lifted and normality returns to the economy in stages, you will be able to add back numbers as demand dictates but develop a more productive business. How many of those furloughed roles really need to come back?

What to expect on productivity?

There are many ways to measure productivity, but by far two of the simplest and most helpful methods are:

  • Sales per person – Total sales divided by number of staff
  • Total salaries % of sales – Overall salary expense divided by salesThese two ratios are vital to your competitiveness and will need constant adjustment to manage your business through the crisis. You should use this period to not just control your current staff requirements, but also focus on the post-crisis target to lift your overall productivity by 12%.Why 12%? For a typical company, salaries make up 16% of sales. A 12% lift in productivity would see this ratio fall to 13%. Given that the average salary is £30000, this could add 3% to your bottom line.The coronavirus is a crisis of epic consequence but for well organised businesses it is also an opportunity to:

1. Increase your productivity

  1. Improve your bottom line
  2. Ensure a balanced recovery with the right amount of staff

What can we learn from before the virus?

Heading into the current crisis, productivity was already an issue in the Staff Uniforms & Corporate Wear industry. It would seem that many in the industry had increased headcount over recent years and decade with scant regard for how much it was adding to income and, more importantly, profit. The average values for the market paint a mixed picture including:

  • The average sales per employee is now sitting at just £133,000 per person
  • The average salary per employee is £30000 – an increase on last year
  • Perhaps of most surprise is that profit is only £2478 per employeeWho was making progress on productivity?For some time now the industry has been split into two groups: those delivering productivity gains and those with stagnant productivity. The gap does appear to be widening as technology, capital investment and access to markets change. Well before the crisis this was starting to give a group of companies a huge competitive advantage in the market.

Who was making progress on productivity?

For some time now the industry has been split into two groups: those delivering productivity gains and those with stagnant productivity. The gap does appear to be widening as technology, capital investment and access to markets change. Well before the crisis this was starting to give a group of companies a huge competitive advantage in the market.

TypeSales per personSalaries % of sales
Upper£358,00022%
Average£133,00016%
Lower£52,0007%

What to look out for in the weeks ahead

A great deal of news will break on employment and staff numbers in the months ahead. To supportyour own company’s success, it will be necessary to understand these decisions and judge them in thecontext of overall financial health.

  • Fast growing firms – recruiting staff to seize market share opportunities
  • Financially strong firms – making redundancies to preserve strength
  • Financial weak firms – shedding jobs to downsize as part of a consolidation plan
  • Declining firms – making a gentle adjustment to their business to ensure competitiveness

What targets should you set?

The Staff Uniforms & Corporate Wear industry is marked by the variety of performance on productivity among its key protagonists – the difference is vast. As you can see from the above table the range of performances are wide.

So, it is time to set your targets, take a look at below spread of figures, plot your own current performance and decide if 12% is the target you would like to aspire to.

The first productivity target to set is the Sales Per Employee or how much you are generating per role within your business. The following sets various levels of performance from lowest to highest:

Sales per employee

GradePre-Crisis ActualPost-Crisis Target
Lowest£52k£58k
Low£86k£96k
Average£133k£149k
Higher£216k£242k
Highest£358k£401k

The next productivity measure to target is Salaries as a % of Sales – how much of your revenue are you paying out in the staffing costs:

Salaries % Sales

GradePre-Crisis ActualPost-Crisis Target
Lowest7%6%
Low10%9%
Average16%14%
Higher21%18%
Highest22%19%

Financial health

Measuring long term financial stability and stress testing the ability of the UK’s leading Staff Uniforms & Corporate Wear companies to withstand this once in a lifetime crisis are two of the bedrocks of what we do at Plimsoll.

The reason? Good companies fly and poor ones die. The coronavirus is more likely to claim corporate casualties in the UK industry from among the companies that already had weaknesses in their financial position before the crisis hit.

Companies can be funded in two ways, via the shareholders or through outside investors. In the coming months in the Staff Uniforms & Corporate Wear industry, it will be clear who is going to foot the bill for the crisis, who has the confidence to take the risk on and which companies are likely to fail.

What to expect regarding Financial Health?

Some companies are in more trouble than others. 120 are financially strong and have a good history of profitability. Provided their management make the right decisions, their future looks most secure.

56 other companies are exposed and time is not on their side. Their speed of recovery will be challenging, they may be looking at a survival strategy, emergency funding or even selling off parts of their business. Ultimately, if the confidence of the lenders and the shareholders is low they will have areluctance to invest more. It’s inevitable that companies will fail or be sold as lenders and shareholders cap their losses.

Some types of companies to keep an eye on in the weeks ahead include:

Overseas Owned – It has been common practise for parent companies to fund their UK subsidiarieswith debts. It’s now very possible that they may look to offload, cap or reduce their risk.

Part funded – Any outside investor will be looking seriously at which firms they are going to back and which they are not. Funding further losses is something investors may have no appetite for.

Heavily indebted – Companies exposed to lenders will have less time. We may see these firms shut or forced to sell non-core assets and divisions to raise quick funds to support the main business.

Privately funded – Firms with reluctant shareholders will shrink their business and restructure cost. Adjusting their size will provide a firmer financial footing and protect shareholder wealth.

What can we learn from before the virus?

The financial health of 56 firms was already a concern. A combination of declining profits and rising debts meant that these firms had a low and falling Plimsoll chart going into the crisis. It was not all bad news however, as 120 firms were rated as strong with good financial health.

Plimsoll measures the overall financial health through the Plimsoll chart; a combined measure that tracks the financial health of a company over a period of years.

RatingNo of cos% Industry
Strong12045%
OK9234%
Danger 5621%

As the above table shows, the financial health of the top 268 companies is mixed with 21% rated as danger and 45% rated Strong.

How do you monitor signs of risk?

When viewing your Plimsoll Analysis, please note the relevant charts below. Remember any fall is a sign of a weakening position, whereas a rise in any line is an improvement.

page11image47006112

What to look for:

Overall financial health – the Plimsoll chartA rising Plimsoll chart is a sign of improvement in overall financial health, while a falling line denotes a decline in financial health. This is the combined measure of the previous charts. In testing this analysis, 9 out of 10 previously failed companies showed a low and falling Plimsoll chart up to 2 years prior to their demise.

page11image47006320

What to look for:

ProfitabilityIn order to maintain or increase sales, firms are often forced to increase costs or reduce their margins. If this trend continues for a number of years and management does not take action, it can often lead to losses. as with Virgin Airlines.

page12image46991808

Gearing

Once margins and costs come under pressure companies require more capital, forcing them to increase the outside finance and hence reducing the stake for the shareholders. A continuous fall in this chart is a sign the company is more exposed to their lenders. Thomas Cook were particularly exposed in this area.

page12image46826928

Trading Stability

Most troubled companies experience a fall in this chart as total investment gets out of sync with sales. This was particularly true for companies like Jamie Oliver Restaurant Group. They were receiving great accolades for sales increases but this growth was being driven by over- investment.

What happens if you don’t heed the warning signs?

The 56 firms with a low and falling Plimsoll chart will need a quick response from the management to ensure their recovery. We have already seen examples of this in other industries, with firms such as Virgin Airlines, Brighthouse, Chiquito and Carluccio’s. See the attached analysis of Virgin Airlines.

Please take a look at your latest Plimsoll analysis and form your own views on the challenges ahead of each of the 268 major companies in the UK Staff Uniforms & Corporate Wear industry.

Conclusion

Getting through the crisis has been a challenge for us all. Maximising your company to take advantage of the recovery is critical and Plimsoll can help you stay steps ahead of the rest.

To summarise the findings of the crisis report, over the next 6 months and beyond you may want to monitor:

  • Sales Growth – What are the trends across the market and how do you compare?
  • Profitability – Who is making a healthy margin and who is losing money?
  • Productivity – Are you getting enough from your staff?
  • Financial Health – Who is in trouble, who is powering ahead and where do you sit?Your subscription to the Plimsoll Analysis contains the most up to date financial analysis you need to keep one step ahead of the rest of the UK Staff Uniforms & Corporate Wear industry. To ensure that you have the coverage and experience, please remember we are here to help and provide:
  • Demo Services – Not getting enough from the analysis? Call our product team today to book a demonstration and walkthrough of how to use the Plimsoll Analysis and all its key tools and features.
  • Continuous Updates – Keep coming back to your online Plimsoll Analysis to see the latest updated analysis, including financial data and newly added companies.
  • Enhance your financial data – Want to add more up to date financial data for your own company, even in draft version? Just send it across and our data team will add it for you today.
  • Missing companies – Found a company from the Staff Uniforms & Corporate Wear industry that is not currently included in your Plimsoll Analysis? Let our team know and we will get that added for you immediately.For all enquiries or to book a demo of your Plimsoll Analysis, please call 01642 626400. To visit your Plimsoll Analysis please visit www.plimsoll.co.uk and choose the log in option.

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