Retail profit warnings more than double as high street pressures mount

Yahoo

5 days ago

Profit alerts among retailers more than doubled in the second quarter as consumers reined in their spending and firms faced soaring wage costs, according to a report.
The latest report from EY-Parthenon also revealed that overall profit warnings among UK-listed firms jumped by a fifth year-on-year in the second quarter – with a record proportion citing policy changes and geopolitical uncertainty as the leading factor.
The data showed that seven UK-listed retailers, including supermarkets, cut profit guidance between April and June.
Britain's retail sector has come under significant pressure since last autumn's Budget move to hike National Insurance Contributions (NICs) and the minimum wage, both taking effect in April.
But EY said the high street was also facing tough consumer spending challenges, with shoppers cutting back and focusing on value.
EY partner Silvia Rindone said the spike in retail warnings 'highlights both softening consumer demand and the deeper structural headwinds facing the sector'.
'Retailers we speak to tell us that falling sales are currently indicative of a longer-term shift, with consumers becoming more value-focused and less brand-loyal, which leaves cost-pressured retailers in a bind,' she said.
Tariff woes sparked by US President Donald Trump waging a trade war also featured heavily in the report, contributing to a rise in the number of alerts more widely across corporate plc.
The report found that the number of profit warnings issued by UK-listed companies rose by 20% to 59 in the second quarter compared with 49 a year ago.
The top factor was policy change and geopolitical uncertainty, cited in nearly half (46%) of all warnings – up from 4% a year earlier and the highest since the study was launched over 25 years ago.
Over one in three (34%) warnings flagged tariff-related impacts, such as weaker demand, supply chain disruption and volatility in currency movements.
The proportion of warnings to cite contract and order cancellations or delays remained at a record high of 40% in the quarter.
Jo Robinson, EY-Parthenon partner and turnaround and restructuring strategy leader, said: 'The latest profit warnings data reflects the scale of persistent uncertainty and how heavy it continues to weigh on UK businesses.
'While this uncertainty has been a recurring theme since mid-2024, it has intensified so far this year – driven largely by geopolitical tensions and policy shifts – compounding pressure on both earnings and forecasts.
'While the announcement of global tariffs has clearly played a part in amplifying uncertainty, they are just one factor among broader geopolitical and policy upheaval.'