Sunday 19 January 2020 1:41 pm

Third of retailers issue profit warnings in 'bruising' year for UK high street

A third of retailers issued a profit warning last year following a “bruising” year for the UK high street. 

For the second year in a row, a third or more of the FTSE retailer sector warned on lower profits over the course of 2019.

The number of profit warnings fell from 36 in 2018 to 32 last year, with just four warnings in the final quarter. 

However, the crucial Christmas trading period was disappointing for many retailers, and profit warnings in January have already topped the fourth quarter total, according to research by professional services firm EY. 

Superdry, Joules and John Lewis are among the high street brands to issue profit warnings this month, citing weak sales over the festive trading period. 

EY restructuring partner Lisa Ashe said: “Weak consumer confidence, rising costs and intense promotional activity have created an exceptionally tough climate for retailers, who face an additional race to adapt to rapidly changing shopping habits.

“Post-Christmas trading updates once again underlined the stark contrast between the retailers that are creating  compelling, engaging online and store offering, and those who have fallen behind.”

According to EY research profit warnings for UK businesses overall were “exceptionally high”, rising nine per cent year-on-year to 313 – the most recorded since 2015.

Retailers issued the most warnings during the year, followed by industrial support services, and software and computer services. 

During the fourth quarter, 22 per cent of profit warnings blamed political uncertainty, while a third cited delayed or cancelled contracts. 

Alan Hudson, head of restructuring at EY, said: “2019 was a challenging year, full of twists and turns that undoubtedly contributed to a remarkably high level of profit warnings. 

“A toxic combination of protracted uncertainty and rapid sector change left many companies facing an uphill struggle to meet their earnings forecasts in 2019.”