Profit warnings issued by listed retailers in the third quarter of this year were almost double the same period in 2024, according to a report issued by EY-Parthenon.
Listed retailers issued nine profit warnings, the highest level since the fourth quarter of 2023. Notably, 56% of these cited falling consumer sentiment as a key factor, underscoring growing concerns about the economy.
The report highlights challenges facing listed companies in these sectors, such as grocery and personal care, including delayed purchases and a shift towards lower cost options, driven by rising costs and evolving consumer preferences.
Additionally, companies in the consumer discretionary and consumer staples industries, covering a combined 12 FTSE sectors, reported 24 profit warnings during the third quarter – the highest number since the same period last year (27).
“Retailers are entering the golden quarter under immense pressure, with profit warnings at a two-year high and profit warnings citing weaker consumer sentiment at their highest since 2022,” said Silvia Rindone, EY-Parthenon UK&I Retail Lead.
“The EY-Parthenon data shows that over half of retail warnings stem from declining confidence, and this is compounded by rising wage and tax burdens. To remain competitive, retailers must not only adapt to shifting consumer preferences but also rethink cost structures and operational agility. Innovation is no longer optional – it’s the key to resilience in a market defined by volatility.”
Beyond the retail sector, the overall landscape for UK-listed companies reveals shifting trends. One in five of the 64 profit warnings issued during Q3 2025 cited the impact of weaker consumer confidence, the highest proportion recorded for this cause since 2022, and a significant increase from just 6% during the same period last year.
The leading factor here was policy change and geopolitical uncertainty, cited in 47% of warnings. This represents the highest percentage recorded for this cause in over 25 years of EY’s analysis, up from 17% in Q3 2024. Additionally, 34% of profit warnings were linked to contract and order cancellations or delays, while 22% referenced tariff-related impacts, including weaker demand and supply chain disruptions.
Over the last 12 months, 18% of UK-listed businesses have issued at least one profit warning.
Jo Robinson, EY-Parthenon Partner and UK&I Financial Restructuring Leader, concluded: “Companies are still clearly seeing ripples from earlier geopolitical tensions and policy shifts, and the proportion of firms to have issued a warning in the last 12 months has consistently been at a level typically associated with a period of economic shock for the past two years.
“As the government faces difficult decisions ahead of the Autumn Budget, businesses are continuing to navigate market shifts and external threats, adapting their operations and supply chains to ongoing uncertainty and growing risks like cyberattacks.
“While buoyant equity markets over the summer sustained a narrative of corporate resilience, resilience is not immunity. Forecasting confidence is being disrupted by near-constant change, and restructuring activity continues to rise as persistent pressures leave many companies with tighter liquidity and reduced flexibility. In this environment, firms must adopt a measured, scenario-based approach that balances both agility and strategic clarity.”
NAM Implications:
- Realists accept that trust was the greatest casualty of lockdown.
- And ‘thinking for oneself’ takes time.
- When people are uncertain, they discount all promises.
- And cut spending/investment accordingly.
- Issuing a profit warning is simply a final step in the process…
