UK retailers see big jump in profit warnings at end of 2011
A new report by accountants Ernst & Young reveals that the number of companies in the UK that have had to issue a profit warning has risen by 70 per cent in the final quarter of 2011.
Companies listed in the UK issued 88 profit warnings in the final three months of 2011, up from 51 in the same quarter in 2010. This represents the highest quarterly jump in ten years.
There were 196 profit warnings in the whole of 2010. This jumped to 278 in 2011, but was still below the peak seen in 2008 – credit crunch year zero – when there were 449. There were 282 profit warnings in 2009.
The sectors that saw the most warnings on profits were retail and support services. Ernst & Young said that economic uncertainty and lack of consumer confidence had led to cutbacks in spending from both individuals and businesses.
The trend could continue into 2012 despite encouraging retail sales over Christmas. Most analysts believe that consumers took advantage of fierce competition and discounting to get value for money from their Christmas shopping but that a period of concerted cutting back is likely to be prevalent in the first part of 2012.
This could lead to more firms shutting down. Already two clothing chains, Peacocks and Pumpkin Patch have seen difficulties in the first few weeks of 2012.
The report highlights the difficulties faced in the retail sector. It says 39 retailers issued profit warning in 2011, more than the whole of 2009 and 2010 combined.
HMV is another retailer that has suffered recently and is expected to make a loss for its financial year. Even Tesco, such a strong part of the UK retail scene for the past 20 years was forced to issue a profit warning after poor Christmas trading.
Compare personal loans from a wide range of providers.
Follow Myfinances.co.uk on Twitter: @news_myfinances
Sign up to the Myfinances.co.uk newsletter to receive the latest financial news direct to your inbox.
- Tags:
- ernst and young ,
- loans and credit ,
- news ,
- profits ,
- retail ,
- retail figures ,
- retail sales ,
- tesco
Comments
Newsletter sign up