Retail profit warnings more than double as high street pressures mount
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.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Guardian
11 minutes ago
- The Guardian
Trump tells Europe to ‘get your act together' on immigration before US-EU trade talks
Intensive negotiations are continuing on Saturday between the EU and the US before a crunch meeting in Scotland between Donald Trump and the European Commission president, Ursula von der Leyen, to avert a costly trade war. Trump spent the night at his family-owned Turnberry golf resort on a private visit, but took time to criticise European leaders over wind turbines and immigration claiming there won't be a Europe unless they 'get their act together'. 'I say two things to Europe. Stop the windmills. You're ruining your countries. I really mean it, it's so sad. You fly over and you see these windmills all over the place, ruining your beautiful fields and valleys and killing your birds,' he said. 'On immigration, you better get your act together,' he said. 'You're not going to have Europe anymore.' On Saturday morning, he abandoned a scheduled meeting with the press, who travelled with him on Air Force One, for a round of golf at his seaside course with music blaring from the buggy he drove. Sky News, stationed next to the course, reported the songs included Billy Joel's Uptown Girl, Elaine Paige's Memory and Simon and Garfunkel's Bridge over Troubled Water. Billed as a four-day family visit to Scotland, Trump is meeting European leaders and the British prime minister, Keir Starmer, raising hopes of new and refined trade deals with the EU and the UK. On the prospects of an EU trade deal, the US president has said there were '20 sticking points'. When asked what they were, he said: 'Well, I don't want to tell you what the sticking points are.' He described von der Leyen as a 'highly respected woman' and said the meeting on Sunday with the EU chief would be 'good', rating the chances of a deal as 'a good 50-50'. It is understood von der Leyen and her aides will fly in on Saturday, with the European trade commissioner, Maroš Šefčovič, arriving on Sunday morning. It is expected the deal will centre on an outline agreement in principle over 15% tariff rates for exports including cars, but with a 50% tariff continuing on steel. There may also be a breakthrough deal on pharmaceuticals, setting a rate of 15% for exports. Although this would breach a longstanding World Trade Organization agreement that medicines are rated at a zero tariff, it would be a far cry from the 200% tariff Trump threatened to impose on pharmaceuticals earlier this month. This would have triggered a highly damaging trade war not just with Ireland, where many US multinationals are based, but Germany, Denmark, Belgium, France and Spain. Von der Leyen's spokesperson, Paula Pinho, said: 'Intensive negotiations at technical and political [level] have been ongoing between the EU and US. Leaders will now take stock and consider the scope for a balanced outcome that provides stability and predictability for businesses and consumers on both sides of the Atlantic.' It is believed the meeting will be held in Aberdeenshire and will be followed by a series of meetings with Starmer on Monday, with hopes he will widen the bare bones trade deal he struck in May. Trump's arrival in Scotland has required the biggest security operation since Elizabeth II died in 2022. More than 5,000 police and security personnel are involved in the four-day visit with no risks taken after the assassination attempt on the president a year ago. High perimeter fences have been erected around the coastal golf course with naval vessels patrolling the shore while security drones overhead and dozens of security detail staked out the resort early on Saturday. The heavy security presence may be a foretaste of events to come later in August when the US vice-president, JD Vance, and his family arrive for a holiday in the Cotswolds, reportedly in the village of Charlbury. Locals who resisted the expansion of Trump's golf course in the past asked who would be footing the bill for the security arrangements.
The Sun
11 minutes ago
- The Sun
Iconic homeware chain with 58 stores to close branch in DAYS in a blow to shoppers
A POPULAR homeware chain is set to shut one of its high street stores in days in a blow to shoppers. Lakeland is closing its Broad Street store in Reading on August 8, the store has confirmed to The Sun. Signs in the shop window say that the store is closing and everything must go. Disappointed customers shared the news on Facebook, with one saying: 'Oh nooo! I love Lakeland products! I hate being forced to have to shop online for my favourite items of kitchen and homeware.' They added: 'Reading used to be a vibrant shopping centre which I loved visiting, but not anymore!' Another said: 'What? I love that shop. There's going to be nothing left soon.' Meanwhile, a third commented: 'It's sad when shops have to close especially in my home town Reading.' Lakeland has 58 shops across the UK, employs around 1,000 staff and is based in Windermere in the Lake District. The popular chain sells thousands of homeware and kitchen products including spatulas, food containers and baking suppliers. But the chain's future was thrown into question this year as it searched for a new owner. The company began talks with investor Hilco Capital in April in a deal that would provide a new funding package to support the struggling retailer. Lakeland had been searching for tens of millions of pounds of funding to navigate difficult economic conditions, including the increase in national insurance costs for employers. It also hired financial advisors earlier this year to explore its options. The family-run business was created in 1964 and is now spearheaded by three sons of the founder Alan Rayner. The brothers chose advisory company Teneo to help them navigate a potential sale back in January. Months of discussion with various potential buyers followed, including Modella Capital, which this year acquired WHSmith's high street shops. Why are retailers closing shops? EMPTY shops have become an eyesore on many British high streets and are often symbolic of a town centre's decline. In many cases, retailers are shutting stores because they are no longer the money-makers they once were because of the rise of online shopping. Falling store sales and rising staff costs have made it even more expensive for shops to stay open. The British Retail Consortium has predicted that the Treasury's hike to employer NICs from April 2025, will cost the retail sector £2.3billion. At the same time, the minimum wage will rise to £12.21 an hour from April, and the minimum wage for people aged 18-20 will rise to £10 an hour, an increase of £1.40. In some cases, retailers are shutting a store and reopening a new shop at the other end of a high street to reflect how a town has changed. The problem is that when a big shop closes, footfall falls across the local high street, which puts more shops at risk of closing. Retail parks are increasingly popular with shoppers, who want to be able to get easy, free parking at a time when local councils have hiked parking charges in towns. Many retailers including Next and Marks & Spencer have been shutting stores on the high street and taking bigger stores in better-performing retail parks instead. In some cases, stores have been shut when a retailer goes bust, as in the case of Carpetright, Debenhams, Dorothy Perkins, Paperchase, Ted Baker, The Body Shop, Topshop and Wilko to name a few. What's increasingly common is when a chain goes bust a rival retailer or private equity firm snaps up the intellectual property rights so they can own the brand and sell it online. They may go on to open a handful of stores if there is customer demand, but there are rarely ever as many stores or in the same places. The Centre for Retail Research (CRR) has warned that around 17,350 retail sites are expected to shut down this year. The Reading closure follows the shuttering of another popular store last month. The Lakeland shop in Syon Park, west London, closed its doors for good on June 6. Meanwhile, the store in the Eastgate Shopping Centre, Inverness, was shut down and relocated to the Simpsons Garden Centre in mid-March. Lakeland did not give a reason for the move. At the time customers described the decision as a big loss for the shopping centre.
BBC News
41 minutes ago
- BBC News
Why di demand for matcha tea dey dry up global supply
Matcha mania dey sweep di world. Dem fit see di bright green Japanese tea in everytin from Starbucks' lattes for UK to Krispy Kreme doughnuts for Singapore. Social media dey drive di global craze for matcha, as influencers dey share brewing tips, reviews and recipes. Di "Matcha Tok" hashtag don get up to tens of millions of views. Matcha growing popularity also dey linked to Japan post-pandemic tourism boom, as di kontri weak currency dey make am attractive destination as well as boosting demand for Japanese goods. For di middle of di hype, demand for di powder dey rise. US-based tea importer Lauren Purvis tell BBC say her customers dey see once as month supply of matcha running out in days. "Some cafes even dey ask for one kilo per day. Dem dey desperate to keep up," Ms Purvis, wey dey run Mizuba Tea Co tok. But di high demand, combined wit smaller tea crops sake of heatwaves and US tariffs on Japan, also dey push up matcha prices. Traditionally, Matcha - wey pipo dey use sake of im health benefits, caffeine and flavour - na di product of one centuries-old and highly-specialised process. Dem dey make am from green tea leaves called na tencha, wey dem dey keep under shade for weeks as dem still dey grow. Dis step dey very important for developing di tea signature "umami" flavour - one ogbonge taste wey complement dia natural sweetness. Dem go harvest di leaves, dem go use stone mills dry and ground dem into powder, wey fit produce just 40g (1.4oz) of matcha one hour. But in recent months growers dey struggle, as record-breaking heatwaves dey affect crops. For di Kyoto region, wia about one quarter of Japan tencha come from, hot weather don lead to poor harvests even as demand increase. Di kontri also dey face shortage of farmers as dia population dey old and younger pipo wey dey go di industry no plenty. Shops for Uji, one city for Kyoto famous for matcha, dey always see dia shelves go empty as tourists dey enta to buy once dem open dia doors. Sake of day, many retailers don set limits on how much customers fit buy. Kyoto-based Camellia Tea Ceremony dey allow customers buy only one tin of matcha each as visitor numbers doubled ova di last year, director Atsuko Mori tok. Tea master Rie Takeda also tok say she gatz closely monitor her stocks of matcha, as orders wey go bifor arrive in just days now dey take more dan one week. She dey work for Chazen, one tea ceremony chain for Tokyo, wey dey host traditional rituals serving matcha to guests. Shortages mean tea prices for Chazen outlets don rise by around 30% dis year. "[Di demand] dey good," Ms Takeda tok through one translator. "Na gateway for more pipo to sabi about Japanese culture." E also don attract more growers. Matcha production nearly triple between 2010 and 2023, according to Japan agricultural ministry. Dem also tok say green tea exports, including matcha, also rise 25% last year to 36.4bn yen (£180m; $250m). Savour, not hoard Di craze for matcha craze don spark one movement to promote more mindful consumption. Advocates don call out pipo wey dem see say dey hoard matcha or dey profit from dia popularity. Odas don ask tea drinkers to dey careful about how much dem dey use, and to savour matcha for dia purest form instead of as ingredient in recipes. E dey "a bit sad" to see how pipo dey use high-grade matcha to cook – as dia delicate flavour often no dey show - or stockpiled for resale, Ms Mori tok "Matcha na di highest grade of tea and e dey so special to us. So a bit of a contradiction dey wen I hear stories about how dem dey resell am or use am for food." Di Global Japanese Tea Association dey encourage pipo to use lower grade matcha from later harvests, wey plenty and good for cooking. High-grade matcha dey often lose dia delicate flavour wen dem use am in drinks like lattes, dem add. "Promoting awareness of these distinctions dey help ensure say Japanese tea dey enjoyed wit respect, while supporting di craft and tradition behind am," di association tok. Dem also say di prices of matcha dey likely to rise further sake of tariffs US dey impose on Japan. On Tuesday, Washington and Tokyo bin announce one trade deal wey go mean a 15% import tax on Japanese products wey dey enta US. Matcha distributors like Ms Purvis dey ready for di impact. Di Oregon-based entrepreneur say orders go up by more dan 70% for early July ahead of one deadline for di two kontris to reach trade agreement. "As dem no dey grow Japanese tea for US, no American industry dey under threat wey tariffs need to protect," she tok. "We hope say dem go realise say dem need to exempt specialty tea." Even as soaring demand and limited supplies push up prices, some light dey on di horizon. At least one matcha cafe chain dey reason say prices go come down in di future - although not for a while. "Pipo dey buy am well-well at di demand and di demand dey grow rapidly, but we think say e go calm down a bit in two to three years."
