Retail reveals 18 warnings in first quarter
Profit warnings at UK quoted companies have reached record levels, Ernst & Young research showed.

Profit warnings soared 21 per cent to 103 in the first quarter year on year, representing a 17 per cent rise on the final quarter of last year.

The general retail sector delivered 18 warnings in the first quarter, double that of the final quarter of last year and the highest number recorded for the FTSE sector during Ernst & Young's eight years of research.

A high number of profit warnings in the retail sector during the first quarter is not unusual, because of companies reporting on Christmas and New Year's trading. However, 18 profit warnings from 15 companies is exceptional - a sign that sections of the retail industry are in real distress, said Ernst & Young.

Ernst & Young corporate restructuring partner Keith McGregor said: 'The retail sector has become polarised. Just 11 companies have been responsible for more than 70 per cent of sector profit warnings issued in the past 12 months. Whichever way we look at it, a small group of retailers appear to be underperforming. Even in relatively benign conditions, several retailers have found themselves in financial distress.'

The study revealed the number of profit warnings from AIM-listed companies rose from 38 the final quarter of last year to 63 in the first quarter of this year. Sixty one per cent of all profit warnings came from AIM-listed companies in the first quarter, up from 43 per cent last quarter.

McGregor said: 'It's too early to say whether this quarter's rise in profit warnings is an anomaly or the start of a sustained increase in corporate distress for some sectors. The profit warning figures seem at odds with improving corporate profitability data. But it is possible to have rising profitability overall, while some sectors and companies remain in distress.'