Retail Sector Resilience Amidst Ongoing Economic Struggles

  • FTSE retailers issued 10 profit warnings in H1 2023, down from 16 in H1 2022
  • Consumer staples sectors saw a substantial drop in profit warnings
  • Cost-of-living crisis continues to impact consumer spending
  • UK consumers’ confidence and ability to spend is decreasing

FTSE retailers have issued only 10 profit warnings for the first half of 2023, marking a fall from the 16 warnings issued during the same period in 2022, according to EY-Parthenon’s latest profit warnings report. The consumer staples sectors, including supermarkets, have seen a substantial drop in the number of profit warnings, with only six reported in H1 2023 compared to 19 recorded in H1 2022. However, EY-Parthenon warns that these businesses may find themselves vulnerable if the cost-of-living crisis continues to squeeze consumer incomes and spending. Silvia Rindone, EY UK&I retail lead, said: “Retailers have enjoyed a relatively positive start to the year, with lower costs also helping companies to meet subdued forecasts. But this could just be the eye of the storm. Energy and food costs are falling, but this release of pressure on disposable incomes is being increasingly offset by increasing rent and mortgage costs. Our latest Future Consumer Index shows UK consumers’ confidence and ability to spend has all but disappeared in the face of these pressures, with 62% of consumers extremely concerned by the cost-of-living crisis and two-thirds (67%) expecting it to get worse over the next six months.” She added: “Brands and retailers need to understand the factors influencing their customers and how these make a difference to spending patterns and attitudes. This will help businesses to continuously re-evaluate and simplify ranges and pricing to meet the needs of today’s consumer.”

Factuality Level: 8
Factuality Justification: The article provides accurate information about the decrease in profit warnings for FTSE retailers and discusses potential vulnerabilities due to the cost-of-living crisis. It also includes expert commentary on the situation from Silvia Rindone, offering insights into consumer behavior and strategies for businesses to adapt.
Noise Level: 3
Noise Justification: The article provides relevant information about profit warnings in specific sectors and offers insights from an expert on the cost-of-living crisis’s impact on consumer behavior. However, it lacks a comprehensive analysis of long-term trends or possibilities and does not offer actionable solutions for businesses.
Financial Relevance: Yes
Financial Markets Impacted: FTSE retailers, personal care, drug, and grocery store sectors
Financial Rating Justification: The article discusses profit warnings issued by FTSE retailers and their impact on consumer staples sectors, which affects the financial markets and companies within these sectors.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: Minor
Extreme Rating Justification: There is no mention of an extreme event in the last 48 hours.

Reported publicly: www.retailsector.co.uk