South East: Retail at forefront of profit warnings

The South East saw high levels of profit warnings in the first quarter of 2018, with 19 listed businesses issuing warnings between January and March – the highest number of warnings in Q1 since 2011 when the region saw 24 profit warnings.

Across the whole of the UK, quoted companies issued 73 profit warnings in Q1 2018, with 13 of these warnings coming from almost a fifth (18%) of companies in the FTSE General Retailers sector. This marks one of the toughest quarters on the UK’s high street, with warnings from the retail sector hitting a seven-year high, according to EY’s latest Profit Warnings report.

South East companies from the following three sectors issued the most warnings in Q1 2018: General Retailers (4), Support Services (4) and Software & Computer Services (3).

Neil Hutt, partner in EY’s transaction advisory team in the Thames Valley, commented: “The exceptionally high number of retail profit warnings is a worrying omen. Cyclical and structural pressures are once again colliding to reshape the UK’s high street. There is still growth at home and especially abroad, however, 2018 is unquestionably a less benign year for many UK companies exposed to the UK consumer economy.

“The level of warnings in the South East reveals increased market volatility and more fundamental concerns, as technology and changing consumer behaviour disrupts many sectors. Where the structural challenge is greatest, we expect to see sharper divides emerge between those who have grasped new realities and those left behind in the old economy.”