Yorkshire profit warnings increase 43% after tough quarter on high street
Quoted companies based in Yorkshire and the North East issued 10 profit warnings in Q1 2018, up from seven in the previous quarter, according to EY’s latest Profit Warnings report.
The figures show that general retailers based in the region were particularly hit (three warnings in total), in what was a tough quarter on the UK’s high street.
Hunter Kelly, EY’s restructuring partner for the Yorkshire and the North East, said: “This volume of warnings from the retail sector was not unexpected given the recent high profile insolvencies and flurry of Company Voluntary Arrangements in the sector. There is undoubtedly a change happening in consumer spending patterns and companies need to adapt quickly.
“This change in consumer behaviour, coupled with technology, is having an impact and disrupting many sectors. Where the structural challenge is greatest, we expect to see sharper divides emerge between those who have grasped new realities and those left behind in the old economy.”
The region had the fourth highest number of profit warnings in the country, after London (17), the South East (19) and the North West (12).
According to the report, retail warnings across the UK hit a seven-year high, with 13 profit warnings from almost a fifth (18%) of companies in the FTSE general retailers sector in Q1 2018.
Across the UK, quoted companies issued 73 profit warnings in Q1 2018, two fewer than the same quarter of 2017 and 10% less than the previous quarter. The FTSE sectors issuing the most profit warnings in Q1 2018 were General Retailers (13), Support Services (10), Software & Computer Services (6), and Travel & Leisure (5).
Cost and competitive pressures remain high on the agenda, cited in 32% of warnings, including over half of FTSE General Retailers and all three FTSE Household Goods warnings. Ten warnings cited adverse exchange rates in Q1 2018, a post-EU referendum high.
Sterling has regained some ground, but its weakness still has bite as companies adapt to new currency hedging arrangements, said EY.
