logo
Retail profit warnings more than double as high street pressures mount

Retail profit warnings more than double as high street pressures mount

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.'
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Ukraine war briefing: Kyiv attack injures five, Trump and Starmer to discuss ‘applying pressure' on Putin
Ukraine war briefing: Kyiv attack injures five, Trump and Starmer to discuss ‘applying pressure' on Putin

The Guardian

time29 minutes ago

  • The Guardian

Ukraine war briefing: Kyiv attack injures five, Trump and Starmer to discuss ‘applying pressure' on Putin

A Russian air attack on Kyiv has injured at least five people and damaged a residential building, the head of the Ukrainian capital's military administration, Tymur Tkachenko, said on Monday via Telegram. British prime minister Keir Starmer and US president Donald Trump are expected to discuss the war in Ukraine when they meet in Scotland on Monday. Downing Street said the talks would include 'applying pressure' on Russian president Vladimir Putin to end the invasion. The two leaders have built a rapport on the world stage despite their differing political backgrounds, with Trump praising Starmer for doing a 'very good job' in office ahead of their talks on Monday, which will focus on the Middle East and trade. It comes after Trump announced a tariffs deal between the US and the European Union after meeting European commission president Ursula von der Leyen for high-stakes talks at Turnberry on Sunday. Von der Leyen called on Sunday for Volodymyr Zelenskyy to uphold independent anti-corruption bodies, with the Ukrainian president signalling legislation to that effect could be adopted within days. 'Ukraine has already achieved a lot on its European path,' von der Leyen said on X after a call with Zelenskyy. 'It must build on these solid foundations and preserve independent anti-corruption bodies, which are cornerstones of Ukraine's rule of law.' After a rare outburst of public criticism, Zelenskyy on Thursday submitted draft legislation to restore the independence of Ukraine's anti-corruption agencies – reversing course on an earlier bill aimed at stripping their autonomy. 'I thanked the European commission for the provided expertise,' Zelenskyy said on X after his Sunday call with von der Leyen. 'We share the same vision: it is important that the bill is adopted without delay, as early as next week.' Von der Leyen also promised continued support for Ukraine on its path to EU membership. Russia scaled down the festivities on Sunday honouring its navy, citing security concerns amid continuing Ukrainian drone attacks. Russian authorities cancelled the parades of warships in St Petersburg, in the Kaliningrad region on the Baltic and in the far-eastern port of Vladivostok that are usually held to mark the annual Navy Day celebrations. Asked about the reason for the cancellation in St Petersburg even as Putin arrived in his home city to visit the navy headquarters, Kremlin spokesperson Dmitry Peskov told reporters that 'it's linked to the overall situation, security reasons, which are above all else'. The Russian defence ministry said air defences downed 99 Ukrainian drones in several regions overnight. Later in the day, it said another 51 drones were shot down near St Petersburg. A man was killed and three other people injured by drone fragments in the region around St Petersburg, according to local authorities. On the trip to St Petersburg, Putin vowed to build more warships and intensify the navy's training, adding: 'The navy's strike power and combat capability will rise to a qualitatively new level.' French president Emmanuel Macron had a phone call with Volodymyr Zelenskyy on Sunday and said later on X that he reaffirmed France's support for Kyiv and vowed to raise pressure on Moscow to force it to 'agree to a ceasefire that paves the way for talks leading to a solid and lasting peace, with full European involvement'.

US, China to launch new talks on tariff truce extension, easing path for Trump-Xi meeting
US, China to launch new talks on tariff truce extension, easing path for Trump-Xi meeting

Reuters

time29 minutes ago

  • Reuters

US, China to launch new talks on tariff truce extension, easing path for Trump-Xi meeting

STOCKHOLM, July 28 (Reuters) - Top U.S. and Chinese economic officials will resume talks in Stockholm on Monday to try to tackle longstanding economic disputes at the centre of a trade war between the world's top two economies, aiming to extend a truce by three months and keeping sharply higher tariffs at bay. China is facing an August 12 deadline to reach a durable tariff agreement with President Donald Trump's administration, after Beijing and Washington reached preliminary deals in May and June to end weeks of escalating tit-for-tat tariffs and a cut-off of rare earth minerals. Without an agreement, global supply chains could face renewed turmoil from U.S. duties snapping back to triple-digit levels that would amount to a bilateral trade embargo. The Stockholm talks come hot on the heels of Trump's biggest trade deal yet with the European Union on Sunday for a 15% tariff on most EU goods exports to the U.S., including autos. The bloc will also buy $750 billion worth of American energy and make $600 billion worth of U.S. investments in coming years. No similar breakthrough is expected in the U.S.-China talks but trade analysts said that another 90-day extension of a tariff and export control truce struck in mid-May was likely. An extension of that length would prevent further escalation and facilitate planning for a potential meeting between Trump and Chinese President Xi Jinping in late October or early November. A U.S. Treasury spokesperson declined comment on a South China Morning Post report quoting unnamed sources as saying the two sides would refrain from introducing new tariffs or other steps that could escalate the trade war for another 90 days. Trump's administration is poised to impose new sectoral tariffs that will impact China within weeks, including on semiconductors, pharmaceuticals, ship-to-shore cranes and other products. "We're very close to a deal with China. We really sort of made a deal with China, but we'll see how that goes," Trump told reporters on Sunday before European Commission President Ursula von der Leyen struck their tariff deal. Previous U.S.-China trade talks in Geneva and London in May and June focused on bringing U.S. and Chinese retaliatory tariffs down from triple-digit levels and restoring the flow of rare earth minerals halted by China and Nvidia's (NVDA.O), opens new tab H20 AI chips and other goods halted by the United States. So far, the talks have not delved into broader economic issues. They include U.S. complaints that China's state-led, export-driven model is flooding world markets with cheap goods, and Beijing's complaints that U.S. national security export controls on tech goods seek to stunt Chinese growth. "Geneva and London were really just about trying to get the relationship back on track so that they could, at some point, actually negotiate about the issues which animate the disagreement between the countries in the first place," said Scott Kennedy, a China economics expert at the Center for Strategic and International Studies in Washington. "I'd be surprised if there is an early harvest on some of these things but an extension of the ceasefire for another 90 days seems to be the most likely outcome," Kennedy said. U.S. Treasury Secretary Scott Bessent has already flagged a deadline extension and has said he wants China to rebalance its economy away from exports to more domestic consumption -- a decades-long goal for U.S. policymakers. Analysts say the U.S.-China negotiations are far more complex than those with other Asian countries and will require more time. China's grip on the global market for rare earth minerals and magnets, used in everything from military hardware to car windshield wiper motors, has proved to be an effective leverage point on U.S. industries. In the background of the talks is speculation about a possible meeting between Trump and Xi in late October. Trump has said he will decide soon on a landmark trip to China, and a new flare-up of tariffs and export controls would likely derail planning. Sun Chenghao, a fellow at Tsinghua University's Center for International Security and Strategy in Beijing, said that a Trump-Xi summit would be an opportunity for the U.S. to lower the 20% tariffs on Chinese goods related to fentanyl. In exchange, he said the Chinese side could make good on its 2020 pledge to increase purchases of U.S. farm products and other goods. "The future prospect of the heads of state summit is very beneficial to the negotiations because everyone wants to reach an agreement or pave the way in advance," Sun said. Still, China will likely request a reduction of multi-layered U.S. tariffs totaling 55% on most goods and further easing of U.S. high-tech export controls, analysts said. Beijing has argued that such purchases would help reduce the U.S. trade deficit with China, which reached $295.5 billion in 2024.

Zero-hours contracts: peers accused of ‘trying to block stronger UK workers' rights'
Zero-hours contracts: peers accused of ‘trying to block stronger UK workers' rights'

The Guardian

time34 minutes ago

  • The Guardian

Zero-hours contracts: peers accused of ‘trying to block stronger UK workers' rights'

Conservative and Liberal Democrat peers have been accused of trying to block stronger rights for millions of workers amid a growing campaign by business leaders to water down Labour's zero-hours contract plans. In a blow for the government, the Lords last week voted to curtail the manifesto promise to give workers a right to a guaranteed hours contract and day-one protections against unfair dismissal. Setting up a showdown with the upper chamber, the Lords passed a series of amendments to the employment rights bill that will must be addressed by ministers when MPs return from their summer break. In an angry intervention on Monday, the general secretary of the Trades Union Congress, Paul Nowak, said the Lords was 'doing the bidding of bad bosses' and ought to 'get out of the way' of the plans. 'The sight of hereditary peers voting to block stronger workers' rights belongs in another century. It's plain wrong,' he said. Under the Lords' amendments, a requirement for employers to offer zero-hours workers a contract covering a guaranteed number of hours would be shifted to place the onus on staff to ask for such an arrangement. Protections against unfair dismissal from the first day of employment – which the government plans to reduce from the current level of two years – would be extended to six months, and changes to free up trade unions would be curtailed. The bill will return to the Commons in September for MPs to consider the amendments. The two houses then continue to vote on the changes in a process known as 'ping-pong' until a way forward is agreed. The amendments were put forward by the Lib Dem Lord Goddard, a former leader of Stockport council, and two Tory peers: Lord Hunt, who is a shadow business minister, and Lord Sharpe, a former investment banker. Hunt did not respond to a request for comment. Sharpe said: 'Keir Starmer's unemployment bill is a disaster for employees as much as it is a threat to business. Labour politicians who have never worked in business are destroying the economy. Only the Conservatives are listening to business and making the case for growth.' Goddard said he feared Labour's 'rushed bill' would be bad for workers in small businesses and on family-owned farms. 'They were badly let down by the Conservatives, and Labour seems to have a blind spot when it comes to farms and small businesses, too. 'We support the bill as a whole and have worked constructively to try to improve it. It's a shame to see the government getting upset that we didn't simply give them a blank cheque.' Employers groups welcomed the changes, saying the Lords was responding to business concerns. Helen Dickinson, the chief executive of the British Retail Consortium, said: 'Putting forward positive, practical and pragmatic amendments to the employment rights bill [will] help to protect the availability of valuable, local, part-time and entry level jobs up and down the country.' Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion Industry chiefs have stepped up lobbying against the workers' rights changes, warning that companies were already slashing jobs and putting up prices in response to tax rises in chancellor Rachel Reeves's autumn budget. Dickinson said there was 'further to go' to curb the employment rights bill. 'Even with these amendments accepted, retailers remain worried about the consequences for jobs from other areas of the bill.' Union leaders have, though, urged ministers to stand firm. A recent mega poll of 21,000 people commissioned by the TUC found a majority of UK voters – including Conservative, Lib Dem and Reform UK supporters – backed a ban on zero-hours contracts. Nowak said the government plan included 'commonsense protections' that a majority of people wanted to see become law. 'These peers are not just out of touch, they are actively defying their own voters – and the public at large. The government must stand firm in the face of cynical attacks and deliver the employment rights bill in full.'

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store