Tesco and Next: Two of the six retailers that contributed to the highest number of profit warnings since 2008

The number of UK-listed firms issuing profit warnings has risen to its highest summer level since 2008, according to a report by consultancy firm EY.

 

It said 69 warnings were issued by firms during the third quarter of 2014 – a 56 per cent increase from the equivalent period in 2013.

 

Profit warnings are issued by listed companies in order to alert investors to the fact that profits will be lower than for the previous year.

 

Six retailers issued warnings during the period, including supermarket chain Tesco and retailer Next. This represented a threefold increase compared to the second quarter, when just two companies issued warnings. 

 

The main reason the report gave for the increase was a crowded and competitive market, despite a rise in economic output.

 

It added that bargain-hunting customers and rapid structural change within companies had hindered progress. 

 

Alan Hudson, EY head of restructuring for UK and Ireland, said: "New entrants, new technologies and shifting consumer behaviour continue to challenge established business models and nowhere is this more visible right now than in food retailing.

 

"The pressure on sales and margins is largely focused on established supermarkets, struggling to adapt to the move away from the big weekly shop and the challenge posed by an expanding group of warehouse, supermarket and high street discounters."