Profit warnings issued by UK-listed retailers were almost double those in the same period of 2024, according to EY-Parthenon’s latest Profit Warnings report.

In the third quarter of 2025, listed retailers issued nine profit warnings, the highest level since the fourth quarter of 2023. Over half (56%) of these warnings cited falling consumer sentiment as a key factor, underscoring growing concerns about weakened consumer confidence.

EY-Parthenon reports that the listed retail sector, which includes companies from the FTSE Retailers and FTSE Personal Care, Drug and Grocery Stores, is particularly vulnerable as consumers become more selective in their spending. It cites delayed purchases and a shift towards lower-cost options, driven by rising costs and evolving consumer preferences, as particular challenges facing listed retailers.

Additionally, companies in the Consumer Discretionary and Consumer Staples industries, covering a combined 12 FTSE sectors, reported 24 profit warnings during the third quarter, the highest number since the same period last year (27).

Silvia Rindone, UK&I Retail Lead at EY-Parthenon, said: “Retailers are entering the Golden Quarter under immense pressure, with profit warnings at a two-year high and profit warnings citing weaker consumer sentiment at their highest since 2022.”

“The EY-Parthenon data shows that over half of retail warnings stem from declining confidence, and this is compounded by rising wage and tax burdens,” Rindone added.

“To remain competitive, retailers must not only adapt to shifting consumer preferences, but also rethink cost structures and operational agility. Innovation is no longer optional, it’s the key to resilience in a market defined by volatility,” she said.

Consumer confidence & geopolitical uncertainty impact profit warnings

Beyond the retail sector, the overall landscape for UK-listed companies reveals shifting trends. One in five of the 64 profit warnings issued during Q3 2025 cited the impact of weaker consumer confidence – the highest proportion recorded for this cause since 2022, and a significant increase from just 6% during the same period last year.

The leading factor behind profit warnings in the third quarter was policy change and geopolitical uncertainty, cited in nearly half (47%) of warnings.

This represents the highest percentage recorded for this cause in over 25 years of EY’s analysis, up from 17% in Q3 2024. Additionally, one-third (34%) of profit warnings were linked to contract and order cancellations or delays, while 22% referenced tariff-related impacts, including weaker demand and supply chain disruptions.

Over the last 12 months, nearly a fifth (18%) of UK-listed businesses have issued at least one profit warning.

Jo Robinson, EY-Parthenon Partner and UK&I Financial Restructuring Leader, said: “companies are still clearly seeing ripples from earlier geopolitical tensions and policy shifts,” adding that the proportion of firms issuing a warning in the last 12 months has been consistent with levels associated with a “period of economic shock.”

“As the Government faces difficult decisions ahead of the Autumn Budget, businesses are continuing to navigate market shifts and external threats, adapting their operations and supply chains to ongoing uncertainty and growing risks like cyberattacks,” Robinson added.