Linen giant Johnson flags ‘competition for labour’

Runcorn-based workwear and textile firm Johnson Service Group (JSG) said on Thursday that “competition for labour has meant that costs of production have seen an increase” and that “along with less than optimal productivity in the short term” this will have a small impact on its margins in the coming months.

In a trading update for the six months to June 30, 2021, JSG said: “As anticipated, trading has continued to improve since our last statement issued in May.

“Workwear volumes in June were some 98% of normal levels, up from 96% in March. We have seen some uptick in sales opportunities as businesses return to more normal trading patterns.

“In HORECA (hotel, restaurant and catering), volumes in June were over 70% of normal compared to 30% for the last two weeks of April.

“We had been proactively planning for the anticipated increase with our customers but the trajectory of the increase in demand was steeper than expected across the industry.

“Whilst volumes remain difficult to predict from week to week, we anticipate that volumes will see further increases as we enter the peak summer months.

“The rapid increase in volumes has resulted in all staff being brought back from furlough, such that no further furlough claims will be made from the end of June 2021.

“In addition, we have recruited a significant number of employees across HORECA and this is ongoing.

“In common with many other businesses, the competition for labour has meant that costs of production have seen an increase.

“This, along with less than optimal productivity in the short term as volume levels build, will have a small impact on margin in the coming months.

“Maintaining our normal high service levels has been a challenge as volumes are scaling up rapidly.

“We have been actively working with our customers to resolve the challenges of shifting demand and service delivery has improved significantly in recent weeks.

“Net debt, excluding IFRS 16 liabilities, at the end of June 2021 was £8.8 million.

“Results for the half year are expected to be published in early September.”

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