UK retail profit warning numbers double
today Jul 23, 2018
UK retail profit warnings have surged this year with big names in the fashion sector prominent among those saying their earnings will fall short of expectations.
A new EY report said that FTSE-listed retailers have issued double the number of profit warnings in the past year compared to 2017 as subdued consumer spending, migration online and Brexit issues have pushed up costs, driven sales down and made a number of physical stores unprofitable.
EY said that there were 10 profit warnings in H1 last year and 20 this time with Debenhams, Moss Bros, Carpetright and Card Factory having all issued warnings. That’s in addition to a number of non-listed companies that have gone under, launched CVAs or otherwise indicated that trading isn’t as strong as they’d like it to be.
And even healthy companies have seen sales growth that’s slower this year with Ted Baker reporting slower sales last month, Superdry this month saying store sales were harder to come by, and Footasylum saying profit growth this year will be slower than last year.
Meanwhile the EY report said that many of the year’s profit warnings from listed companies came shortly after Christmas with the festive season not providing the shot in the arm it usually does. And that could also mean trouble ahead. With stores struggling this year, a successful Christmas 2018 season is even more a necessity but consumers still don’t seem to be in a spending mood.
EY’s head of restructuring Alan Hudson said that the warm summer, royal wedding and World Cup have boosted spending but risks remain at home and abroad.
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