Plimsoll Publishing’s latest review into the top 488 businesses operating in the debt collection agencies industry has found that 50 companies are showing the same characteristics as HMV, Comet and Blockbuster.
Sales have worryingly declined in the latest year and profitability has plummeted to such an extent that these businesses are now operating under severe financial pressure.
David Pattison, senior analyst on the project, said: “As seen with the recent closures and administration of big high-street stores, these were all victims of outdated business models. It’s much the same in the debt collection agencies market, the overall market is healthy, but these companies are falling behind.
“These phases of the business cycle often lead to casualties. What’s different this time is the pace of this change as, in the past, it’s taken up to 10 years for a large company to fail, but technological changes have meant it’s now only taking a few years.
“Fifty have seen their sales fall by up to 26%. They are losing money and many have seen productivity fall to such an extent that they are becoming increasingly noncompetitive in a fast moving market.”
Pattison added: “Historically, these businesses would have been seen as good acquisitions. But today you would need to questions their value and how they would sit in the future market.”
“The latest Plimsoll Analysis also shows that the market is in a healthy state and on average sales are increasing at 2.9%, with margins sitting at 7%. Indeed, 34 companies are showing increased profitability and sales – more proof that the market is prospering.
The good news is if we do see job losses, it’s highly likely that by moving to an up-and-coming rival, jobs will be created and the overall number of staff in the market could stay the same using transferable skills.
The Plimsoll Analysis, provides an individual profile of each of the UK’s top 488 debt collection agencies.