UK-listed retailers issued seven profit warnings during the second quarter of 2025, double the amount seen in the first three months of the year.
This forms part of the turbulence across the entire economy seen during the April to June period. The number of profit warnings issued by listed companies across all UK sectors (59) was 20% higher than during the same three months in 2024.
“This spike highlights both softening consumer demand and the deeper structural headwinds facing the sector. Retailers we speak to tell us that falling sales are currently indicative of a longer-term shift, with consumers becoming more value-focused and less brand-loyal, which leaves cost-pressured retailers in a bind,” said EY partner and UK&I retail lead Silvia Rindone. The figures were gathered by the consulting firm’s strategy arm, EY-Parthenon.
Among the big grocers, Sainsbury’s and Tesco both warned of lower profits next year during their April results. This was in the aftermath of Asda, which is not listed, saying it was going to eat into profits to fund lower prices in store.
The leading factor cited by companies across all sectors was policy change and geopolitical uncertainty. Nearly half (46%) of the 59 warnings stated that this was a reason, compared to 4% in Q2 2024. This was the highest rate seen for this cause in over 25 years of analysis by EY.
One in three warnings (34%) also cited tariff-related impacts, such as lowered demand, supply chain problems and exchange rate volatility.
Two consecutive months of the economy shrinking, an unexpected rise in inflation and a weakening job market have some retailers wary of the second half of the year.
“The latest profit warnings data reflect the scale of persistent uncertainty and how heavy it continues to weigh on UK businesses. While this uncertainty has been a recurring theme since mid-2024, it has intensified so far this year – driven largely by geopolitical tensions and policy shifts – compounding pressure on both earnings and forecasts,” said EY-Parthenon Partner and UK&I Turnaround and Restructuring strategy leader Jo Robinson.
Among those in the FTSE Retailers group, the number of profit warnings was four during the Q2 period. However, supermarket retailers sit within the FTSE personal care, drug and grocery sector, which is how EY got to seven.
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