Retail sector struggles with weak consumer sentiment as profit warnings surge

According to EY’s latest Profit Warnings report, nine listed retailers issued profit warnings in the third quarter of 2025 – the highest level since the fourth quarter of 2023. Over half of these warnings cited falling consumer sentiment as a key factor, which EY said underscores “growing concerns about weakened consumer confidence”.

Across all listed businesses, 64 companies issued profit warnings in the third quarter, with a record 47% of warnings citing “policy change and geopolitical uncertainty” as leading factors, up 17% year on year.

The report found that nearly a fifth of all UK-listed businesses have issued at least one profit warning in the last year, highlighting the tough conditions many businesses are facing.

EY-Parthenon UK&I retail lead Silvia Rindone said: “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.

“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.”