Downgrades a warning to TCF industry

NATIONAL: Scores of TCF companies have had their risk profile or bill payment outlook downgraded in recent months, according to credit reporting agency Dun & Bradstreet.

Collated over six months from October 2008 - the beginning of Australia's first quarter of negative economic growth in 17 years - the data included Standard Industry Classification (SIC) companies in every Australian state. It encompassed the apparel and finished products, apparel and accessories retailing, and footwear retailing sectors, with Victoria and New South Wales holding the largest number of firms.

The news was worst for Victoria where 178 apparel and finished product companies - from a total of 989 or 18 per cent - had their risk profile downgraded. New South Wales companies drew a close second, with 157 from 914 - equalling 17.1 per cent - facing the same fate. In the NSW apparel and accessories retail sector 151 businesses out of 1406 - or 10.7 per cent - faced increased risk of failure, while in Victoria the tally was 131 out of a total of 1291 - or 10.1 per cent.

In terms of payment outlooks, in NSW 16.5 per cent of apparel and finished product companies harboured increased risk of delinquent payment, while in Victoria the figure was 17.2 per cent. Meanwhile the figure for NSW apparel and accessories stores was 10.5 per cent and for Victorian apparel and accessories stores 9.4 per cent.

The downgrades were a warning to businesses to ensure they kept up to date with the risk profile and payment outlook of their customers, Dun & Bradstreet said.

Peak TCF industry body the Council of Textile and Fashion Industries of Australia (TFIA) said it was making its membership aware of the data.

Meanwhile in a separate move, TFIA head Jo Kellock confirmed the council was working with Dun & Bradstreet to undertake a far reaching industry survey that could enhance government funding opportunities for TCF firms.

The initiative - dubbed Project 20K by 2010 - would gather SIC information on 20,000 TCF businesses over a period of 12 months, following Professor Roy Green's TCF Review recommendation that an updated definition of the TCF sector was required.

Kellock said research had already confirmed suspected changes to the nature of the sector.

"For example in the retail sector there are many companies that are now involved with design, manufacture and product development. We are now collating accurate data that reflects this."