Profit warnings continue to rise as retail feels the strain

Reports | Retail | South West
Allen Noble

The South West saw continued low levels of profit warnings in the first half of 2018, with only eight listed businesses issuing warnings between January and June, according to EY’s latest Profit Warnings report.

The figures show the performance of listed companies in the region has remained steady, when compared with the seven warnings in H2 of 2017, and  a marked improvement on the number of profit warnings recorded in the first half of 2017 (14).

However, it was another tough quarter for the UK’s high street with almost a quarter of FTSE General Retailers warning in the first half of 2018. The sector issued 20 warnings (13 in Q1 and 7 in Q2), double the figure set in H1 2017 and a seven year high, according to EY’s latest Profit Warnings report.

Across the whole of the UK, profit warnings rose substantially year-on-year to 58 in Q2 2018, with quoted companies issuing 13 (29%) more warnings than the same period in 2017.

The FTSE sectors with the highest number of warnings in Q2 2018 are: General Retailers (7), Software & Computer Services (6), and Travel & Leisure (5).

Allan Noble, Director in EY’s Transaction Advisory team in Bristol, said: “We’ve reached half-time in 2018 with forecasts on the line. An exceptional summer has boosted consumer spending; but growing downside risks at home and abroad look more enduring. At the same time the retail revolution continues, leaving more companies in its wake.

“Beyond the consumer sphere, profit warnings could rise from their low base, if uncertainty delays decision making. The proportion of profit warnings citing delayed or cancelled contracts reached a six-year high in 2018. Many companies cannot say with any certainty what trading and regulatory regimes they’ll be operating under this time next year.”

Did you enjoy reading this content?  To get more great content like this subscribe to our magazine

Reader's Comments

Comments related to the current article

Leave a comment

Your email address will not be published. Required fields are marked *