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Now is the time for retail acquisitions says Plimsoll

The economic downturn has brought big opportunities for UK fashion retailers to buy each other out and strengthen their position in the market according to a report by industry analysts Plimsoll.

The Plimsoll report identified 408 retail companies which have built up a stockpile of cash which could be put towards acquisitions. The report also identifies 268 companies in the market which are making healthy profits and would make good strategic acquisition targets.

However Plimsoll's senior acquisition analyst, David Pattison said that acquisitions needed to be strategic and retailers should avoid picking up bargain basement companies in distressed situations.

Pattison said: "For years, acquisition activity in the clothing retailers industry has been driven by distressed fire sales. Acquirers have been reluctant to invest heavily, instead they have been content to snap up bargain basement companies often getting bad deals, paying peanuts and getting monkeys. This attitude needs to change. What our report suggests is that companies need to look at the wider strategic picture and spend their money wisely."

The report assessed the UK's top 100 clothing retailers and examined their future prospects.

Pattison added: "Having the resources to buy one of these 268 powerful players is the perfect situation. In doing so, you take a strong adversary to your own company out of the market immediately, and it will instantly be generating profitability. The next step is then to focus your attention on the 275 companies we have identified who are failing anyway, pushing them out of the market. This may sound harsh, but if the industry is to develop and evolve then there will need to be casualties. Our latest study shows the candidates least likely to survive 2008 are pretty obvious."

A full copy of the Plimsoll report into acquisition prospects in the UK clothing retail sector is available from c.sherwood@plimsoll.co.uk. The report costs £350 but readers can claim a £50 discount.

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