One-third of UK-listed retailers issued a profit warning in 2025
One-third (34%) of UK-based listed retailers issued a profit warning in 2025, marking the fourth consecutive year that the proportion of warnings from this sector has been at this level or above, according to EY Parthenon’s latest Profit Warnings report.
FTSE Retailers issued 15 profit warnings in 2025. Although the total number of warnings fell from the 20 issued during 2024, pressure intensified as the year progressed, with nine of the 15 warnings issued in the second half of 2025.
The FTSE Personal Care, Drug and Grocery sector – which includes supermarkets – saw warnings rise to eight in 2025 from five the previous year.
Silvia Rindone, EY-Parthenon UK&I retail lead, said: “Changing consumer behaviour is continuing to make the trading environment challenging, with shoppers trading down, delaying purchases until promotions, and becoming increasingly selective. Despite an uplift in retail sales in 2025, this masks the persistent pressures that many businesses are facing. Rising employment costs – from the National Living Wage to National Insurance – have proved difficult to absorb or pass through in a market defined by fierce competition, price wars, and volatile demand patterns.
“The growing divergence in performance across the sector reflects another structural challenge: the accelerating pace of digital and AI-enabled transformation. Those able to invest in new technologies, automation and operational agility are pulling ahead, while others are struggling to keep up as tech‑savvy competitors move quickly to capture market share.
“Varied Christmas trading results highlighted these pressures, as well as the growing gap between winners and those falling behind. Success in the year ahead will depend on clarity of proposition, and the ability to drive full‑price sales and loyalty in a market where consumers are more discerning than ever.”
UK-listed companies cite policy and geopolitical uncertainty as leading factor for profit warnings
Across all sectors, UK-based listed firms issued 240 profit warnings in 2025 – including 55 in Q4 – the lowest annual total since 2021, when 203 warnings were recorded.
The leading factor behind profit warnings was the impact of policy change and geopolitical uncertainty, cited by more than two in five (42%) of profit warnings issued in 2025. This marked a significant increase from 12% during 2024, and the highest annual proportion recorded for this cause in more than 25 years of EY’s analysis.
The other main driver behind profit warnings in 2025 was contract and order cancellations or delays, cited in a third (33%) of warnings, followed by weaker consumer confidence and rising costs, each referenced in 11% of all warnings.
Nearly a fifth (17%) of all UK-based listed businesses have issued at least one profit warning in the last 12 months, a similar percentage to this time last year (18%).
Jo Robinson, EY-Parthenon partner and UK&I financial restructuring leader, added: “Our latest data shows that the pace of UK profit warnings has slowed, but this feels more like an uneasy pause than a turning point. Many firms continue to face a challenging and uncertain backdrop, with a record level of warnings referencing the knock-on effects of policy and geopolitical upheaval, including tariff-related impacts, Autumn Budget uncertainty, and employer National Insurance contributions changes coming into effect.
“In the last year, we’ve seen businesses shift their focus from planning for a return to previous norms, to recalibrating for a global landscape of lower growth, higher costs and rapid technological disruption. There is no playbook for adapting to this new reality and, while stronger liquidity and lower interest rates have given companies some breathing space, we expect restructuring activity to build as these issues come to a head.
“Much now hinges on what comes next: a bullish recovery where stability and falling interest rates boost confidence, or something more downbeat marked by slow growth and heightened volatility. With 2026 now well underway, these two contrasting narratives are finely balanced.”