South West retailers record highest percentage of profit warnings since 2011

Reports | South West

2018 saw the highest level of profit warnings issued by General Retailers in the South West since 2011, with 18% of the total number of profit warnings by listed companies across the region coming from this sector.

According to EY’s latest Profit Warnings Report, General Retailers in the South West issued four profit warnings in 2018 – comparable with the four warnings issued in 2011.

South West companies across all sectors issued a total of 22 profit warnings in 2018, with 10 of these warnings issued between October and December 2018. Profit warnings in the region have risen consecutively over the past three years, from 18 in 2016, to 21 in 2017, to 22 in 2018.

The South West recorded the highest number of warnings in 2018 from the following two sectors: General Retailers (4) and Travel and Leisure (4).

Other sectors included; Health Care Equipment and Services; Media; Pharmaceuticals and Biotechnology; Software and Computer Services; Support Services; Travel and Leisure; Real Estate Investment and Services; Personal Goods; Household Goods and Home; Construction; Mining; and Electricity.

38% of General Retailers across the UK issued a profit warning – the highest level since 2008 – mirroring the upward trend in the South West. 2018 also saw the second highest level of profit warnings issued by UK plc since 2008, with 287 profit warnings, a rise of 4% year-on-year.

Allan Noble, Director in EY’s Transaction Advisory team in Bristol, commented: “Following events last week, there is further political and economic uncertainty to contend with and no let-up in the pace of change. But rising uncertainty wasn’t the only reason why profit warnings spread in 2018.

“In the retail sector, a combination of a relentless margin squeeze, the continuous need for reinvention and falling consumer confidence made 2018 an exceptionally tough year for the retail sector in the South West and across the whole of the UK.

“What happens next depends on how much more unpredictable 2019 becomes. Markets adjust quickly to new realities, however, in this fast-moving world companies need to keep moving forward or risk finding themselves on the wrong side of sector trends, potentially triggering a new cycle of profit warnings in years to come.”

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