Retailers’ Profit Warnings: A Rough Year, Still a Bit of a Bounce
FYI: The UK’s FTSE Retail sector logged 20 profit warnings in 2024, which is a modest relief compared to last year’s 24 alerts. The latest figures come from EY Parthenon’s fresh Profit Warnings report.
A Quarter of Their Own
- Q4 alone saw seven warnings – that’s a spike from just one in Q3.
Not Exactly a Clean Sweep
Even though the total warnings dipped, the share of listed retailers tossing a red flag was hardly changed: from 39% to 38%.
Segment Breakdown
- Personal Goods firms 75% sent out a warning (10 in all).
- Household Goods & Home Construction companies 52% followed suit (19 warnings).
What’s Driving The Pessimism?
Half of the warnings this year can be chalked up to consumer confidence taking a nosedive.
Comments from EY
“Profit warnings in retail stayed front‑and‑center in 2024,” says EY Partner Silvia Rindone, the UK & I Retail Lead. “Festive season sales looked good, but demand isn’t the whole story. Even with better disposable incomes, people are still wary after the cost‑of‑living crunch, which left many retailers disappointed by year’s end.”
She added, “That’s the secret: shoppers will pay if the price’s right and the offer’s solid. But retailers are feeling the pinch of rising costs, unsure if automation or smarter spend can offset it or if they need to hike prices. With higher wages and the need to evolve to new customer habits, 2025 is going to be a tough play for everyone.”
Bottom line? Retailers are staying on the lookout for anything that could trigger a profit slip‑down. For now, the playground stays warm but uneven.
One in five UK-listed companies issued a profit warning in 2024
Why More UK Companies Are Throwing a Profit Warning Party — And How It’s Not a Full-On Crash
In 2024, about 19 % of UK‑listed firms—roughly one company out of every five—sent out a profit warning. That’s the third highest rate in a quarter‑century, only behind the pandemic hit in 2020 (35 %) and the 2001 “dot‑com bust + 9/11” combo (23 %).
How Many Warnings Did We Send Out?
- End‑of‑Year Total: 274 alerts issued.
- Quarter 4 (Q4): 71 of those came in the last three months.
- Year‑on‑Year: A mild dip from 294 warns in 2023.
What’s Triggering These Warnings?
Short answer: Contracts got cancelled or delayed. This was the top reason in 34 % of all warnings and blew up to 39 % just in Q4—an all‑time high for the last 15 + years.
Another major culprit: Rising costs—hitting 18 % of the recent warnings.
Insight From Jo Robinson (EY-Parthenon)
“It’s been a rollercoaster. Since the pandemic, companies have been navigating a maze of supply‑chain glitches, soaring material and energy costs, labour hiccups, plus higher rates,” she explains.
She adds: “2024 was a bingo night of global politics and policy coups. You can’t just do a one‑size‑fits‑all forecast—every market shift demands an agile response.”
Robinson’s “no‑panic” guidance? Don’t jump straight into insolvency. Instead, use the cushion of cheap debt and lingering pandemic support to find consensual solutions and fresh restructuring hacks.
What’s the Outlook for 2025?
- “A big spike in bankruptcies is unlikely. However, more firms are hitting a pressure threshold, so distress is creeping up.”
- “Insolvency is no longer a terminal exit; it’s a strategic toolkit.”
- “Recruitment remains in a slump, especially post‑job‑ad spend hikes and live‑wage bumps.”
In short: the road ahead is a bit bumpy—think trade frictions, geopolitical tension, rate hikes, and other surprises—but the corporate world is learning to ride the wave instead of capsizing.
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