- General retailers
Underlying pressures remain
FTSE General Retailers issued 12 profit warnings in Q1 2019, one fewer than the same quarter of 2018. In the last 12 months, 34% of the sector has issued a profit warning, slightly less than the 41% warning in the year to Q1 2018.
It may be that we’ve seen the peak of retail warnings in this cycle. Improving disposable incomes and restructuring may provide some breathing space. Nevertheless, the sector is still contending with the same underlying pressures that make it hard to translate sales into profits - from rapid structural change to relentless price pressure.
More challenges to come in 2019
We may have seen the peak of retail profit warnings in this cycle. But retailers that fail to adapt to changing market dynamics will soon hit trouble again, as Martin Carr discusses in his review of sector profit warnings.
- Financial Services
FTSE Financial Services companies issued 10 profit warnings in Q1 2019, equalling 2018’s total in just one quarter. Of the 19 sector profit warnings issued in in the last 12 months, more than half have come from the Investment Services subsector.
When the political backdrop becomes this unpredictable, investors are more likely to stay on the side-lines, with the lack of activity lowering fees. Beyond the impact of Brexit and geopolitical uncertainty, the sector is also dealing with technological disruption, new entrants, rising overheads, and changes to the regulatory landscape - with a knock-on impact on income and the compliance complexity.
Unpredictability amplifies sector challenges
This is a robust sector that is used to adapting to changing circumstances. But, the outlook for financial services remains challenging, as Kevin Gill explores in his review of sector profit warnings.
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, Governments and regulators) on how best to protect, improve and recover value. Alan was an appointment taker in relation to, amongst others, Interserve, House Of Fraser, 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.