271 companies in the market are finishing the year in financial difficulty. David Pattison, author of the new study of the top 682 companies in the UK Garden Centres industry explains, “Having clung on through the bad times many of these struggling companies are running out of time and will fail unless a sustained recovery takes hold. Sadly, some of them are just too weak to carry on and there will be a spike of failures in the New Year. On the flipside, their demise will bring a welcome reduction in competitive pressure for those left”.
However, there are still some good stories in the market despite the persistent gloom. Pattison says “We have picked 206 strong companies that prove success can still be achieved in the Garden Centres industry despite difficult trading conditions. They also prove that bad companies fail in a recession; good companies simply do not. These companies will lead the industry out of recession with some smart acquisitions to help maintain their recent success”.
Pattison is also convinced the market is due further consolidation with the number of companies in trouble leading to heightened takeover activity. He explains “With too many companies chasing weakened demand it is inevitable that there are likely to be a number of high profile mergers and takeovers. Further consolidation is needed to sort out the remaining dead wood. We have named 67 companies as the best acquisition prospects in the market”.
He also reserves special mention for those reckless companies that continue to chase sales despite mounting losses, “There are a group of 147 serial loss makers still operating in the market. For the 2nd and even 3rd year running these companies have made a loss. While the rest have taken painful but necessary decisions to refocus on the bottom line, these reckless companies have continued to chase sale regardless. These companies have to cut their cloth accordingly or face the consequences”.
Summing up, the new edition of the Plimsoll Analysis shows a buffeted market emerging from recession with a third of companies making a loss and 1 in 3 companies in financial difficulty but as Pattison insists “If you are going to make a success of 2011, you need to learn the lesson of the last 12 months. There are going to be big changes in the UK Garden Centres industry with lots of takeovers, a number of high profile failures and even the odd surprise or two along the way”.
The 2011 edition of the Plimsoll Industry Analysis, individually assessing every company in the UK Garden Centres industry, is available now. Readers of Garden Centre Update will get a £50 discount if they call 01642 626400 and quote reference PR/AA10.