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Is Knitting Starting to Unravel?
Listed under: NewsTop Story
Published: Friday, December 08, 2006
Yarn specialist, Sirdar, has recently issued an announcement stating that a downturn in the fashion for hand knitting yarns, coupled with worries over consumer spending, would hit profits this year
The Wakefield-based company had been expected to make an underlying pre-tax profit of £4.4m this year, but analysts are now expecting a profit of just £1.2m. In Sirdar’s announcement of results up to 30th June 2006, released on 14th September 2006, the board stated that, in view of the downturn in demand for fashion hand knitting yarns and a continuing uncertainty over the level of consumer spending, the prospects for further increases in sales and profitability in the current financial year remained challenging.
It is now apparent that the downturn in demand for fashion hand knitting yarns has been more severe than was envisaged and that market conditions for residential floor coverings have also become increasingly difficult. In addition, there continues to be pressure on margins across the group. As a result of this situation and the ongoing volatility in the group’s markets, the board believes it is prudent to exercise considerable caution and it has significantly reduced its expectations for the remainder of the financial year. "The fashion boom for hand knitting is now over," said Kevin Henry, finance director for Sirdar. "It has been very buoyant for the last two years when there was high demand for unusual yarns, but that boom is now over." The group is hoping that more traditional yarns will pick up the slack, but the market was not convinced, as recent shares were down 16% at 38.5p.
The board also reported, in the announcement of results, that significant progress had been made with the reorganisation of the residential floor coverings business and detailed further changes that were planned within that business. The board is now pleased to report that these changes have been completed ahead of schedule and within budget, and that further streamlining is planned for the first half of 2007.
As yet, Sirdar is not able to predict when trading conditions will improve, it will continue to focus on the control of costs and overheads and the effective management of working capital.
It is now apparent that the downturn in demand for fashion hand knitting yarns has been more severe than was envisaged and that market conditions for residential floor coverings have also become increasingly difficult. In addition, there continues to be pressure on margins across the group. As a result of this situation and the ongoing volatility in the group’s markets, the board believes it is prudent to exercise considerable caution and it has significantly reduced its expectations for the remainder of the financial year. "The fashion boom for hand knitting is now over," said Kevin Henry, finance director for Sirdar. "It has been very buoyant for the last two years when there was high demand for unusual yarns, but that boom is now over." The group is hoping that more traditional yarns will pick up the slack, but the market was not convinced, as recent shares were down 16% at 38.5p.
The board also reported, in the announcement of results, that significant progress had been made with the reorganisation of the residential floor coverings business and detailed further changes that were planned within that business. The board is now pleased to report that these changes have been completed ahead of schedule and within budget, and that further streamlining is planned for the first half of 2007.
As yet, Sirdar is not able to predict when trading conditions will improve, it will continue to focus on the control of costs and overheads and the effective management of working capital.
