- General retailers
Highest percentage of retailers warn in a decade
In Q4 2018, FTSE General Retailers issued eight profit warnings, taking 2018’s total to 36 – a 50% year-on-year rise. In 2018, 38% of the sector warned, the highest since 2018.
A combination of a relentless margin squeeze, the continuous need for reinvention and falling consumer confidence made 2018 an exceptionally tough year.
Disposable incomes may rise in 2019, but many retailers will still struggle to keep pace with structural change – with Brexit adding a further layer of uncertainty.
Little respite in 2019
Much of the retail distress we’ve seen in the last year ultimately stems from a struggle to meet short-term sales challenges and to adapt to rapid, but seismic, shifts in consumer behaviour. What could 2019 hold? Jessica Clayton discusses profit warnings in the Retail sector.
- Real Estate
Retail revolution raises questions for landlords
British retailers closed the highest number of stores in eight years in 2018. Unlike 2010, the closures were driven primarily by structural change, rather than economic pressure with no chance of the online revolution reversing.
Modest leverage and low interest rates have limited landlord distress thus far. Prime locations still have high levels of occupancy and are managing to re-let empty sites, in part by attracting non-traditional retailers. But, there is only one direction of travel and changing customer behaviour will continue to challenge retail landlords in 2019 – especially in secondary and tertiary locations.
Retail landlords face fundamental questions
Retail has been through many periods of radical change before, but none which have brought into question the future of shops themselves. There is still a place for physical stores, but far fewer than we have now. So, what happens next? Fergal O’Reilly discusses the outlook for retail landlords.
UK&I Head of Restructuring
Partner, UK&I Restructuring
Partner, UK&I Restructuring
Market Analyst and Author
Alan leads our UK & Ireland Restructuring practice. He joined EY in 1985 and has more than 30 years’ experience working across the restructuring, accelerated M&A, advisory and insolvency arena in a number of industries advising stakeholders (boards, corporates, investors, lenders, trustees and regulators) on how best to protect, improve and recover value. Alan was an appointment taker in relation to, amongst others, Mid Staffordshire NHS Foundation Trust, Focus DIY, Dreams, Orchid Pub Group, Battersea Power Station, White Tower, Dunedin Industrious, DTZ plc, Navan Mining and Luminar nightclubs. He is a member of the editorial board of the Association of Business Recovery Professionals’ (R3) Recovery magazine and is a former member of R3’s Council. He has worked across a variety of geographies and sectors with a particular focus on Consumer Products & Retail, Health / Government & Public Sector, Real Estate, Construction, Support Services and Transportation.
Jon leads EY’s Cash and Working Capital team in the UK and across EMEIA, bringing liquidity solutions to both corporate and private equity clients. Since 1995 he has specialised in helping businesses transform cash forecasting and working capital performance and sustainably build liquidity against urgent deadlines. Jon has extensive experience working with some of the world’s largest businesses across many sectors, including Industrials, Consumer Products and Telecoms.
Lee is a restructuring specialist with over 20 years’ experience advising both lenders and corporates through multi-stakeholder restructuring situations in both public and leveraged finance markets. He has worked across a wide range of sectors, including Banking & Capital Markets, Oil & Gas, Power & Utilities, Consumer Products & Retail, and Telecoms. He has extensive experience helping formulate and implement financial restructuring programmes.
Kirsten is the lead author in our UK&I Transaction Advisory Services practice. She has more than 20 years’ experience of originating and presenting market analysis and insight in a wide variety of formats, from thought leadership to blogs. Kirsten is the lead editor of EY’s Capital Agenda Blog and the lead data analyst and author of EY’s Quarterly Analysis of Profit Warnings.