Profit margins in the consumer durables retail industry have generally increased in 2015.
- In 2015 consumer durables retail showed a positive trend, with robust growth thanks to the economic rebound in Spain, a fiscal expansionary policy, decreased oil prices and a modest rebound in the housing market. Mainly household appliances and furniture retail benefited from the upswing.
- The positive trend also continued in 2016, but growth in retail sales is expected to slow down compared to 2015 due to lingering political issues (hung parliament) and increased uncertainties about the global economy. While consumer financing has eased and unemployment decreased, those improvements remain susceptible to setbacks.
- Financial institutions were more willing to grant loans to retail businesses in 2015, but since the beginning of 2016 they started to be more selective again. Profit margins in the consumer durables retail industry have generally increased in 2015 and are expected to remain stable in 2016.
- Payment behaviour in the consumer durables retail sector was relatively good in 2015. We registered decreasing notifications of non-payments and lower protracted payments in 2015, and expect that payment delays will not rise in the coming months. On average, payments in the sector take 90 days.
- The insolvency environment is stable, with no major increases in business failures expected.
- Our underwriting approach remains neutral for all main consumer durables retail subsectors. Despite the recent upturn, competition in the market remains strong, and the current economic rebound is susceptible to setbacks. The industry remains highly dependent on consumer credit and the performance of still feeble sectors (e.g. real estate and housing).