Profit warnings from FTSE retailers double in Q2 amid tariff and geopolitical pressures

Profit warnings from FTSE-listed retailers have doubled in the second quarter of 2025, highlighting growing economic uncertainty amid a mix of tariff-related anxieties, geopolitical tensions, and shifting government policies. According to the latest report from EY-Parthenon, seven UK-listed retailers issued profit warnings between April and June, up from three in the first quarter of the year. This sharp increase contributes to a wider trend affecting London-listed companies across all sectors, where profit warnings rose 20% year on year to a total of 59 in the quarter. Nearly a fifth of listed companies have issued at least one warning in the past 12 months, underscoring pervasive financial strains throughout the UK economy.

The personal care, drug, and grocery sectors were particularly impacted, accounting for three of the profit warnings in Q2, despite the sector having recorded only four such warnings in the entirety of 2024. Wholesaler Kitwave and retail bakery Greggs were among those recently citing disappointing profit outlooks. Silvia Rindone, EY’s UK & Ireland retail lead, attributes the surge in warnings to weakening consumer demand combined with deep structural challenges facing retail. She noted that retailers report a significant shift in consumer behaviour towards value-driven purchasing and declining brand loyalty, putting additional pressure on already cost-constrained businesses.

Retailers are caught in a bind, forced to invest in technology such as artificial intelligence to remain competitive even as they face increasing input costs—ranging from higher national insurance contributions and an elevated national living wage to increased tariffs on imports. “The winners will be those who get the basics right, such as range, service, and pricing, whilst continuing to build for the future with leaner models, sharper propositions, and digital resilience,” Rindone added.

Jo Robinson, an EY-Parthenon partner specialising in turnaround and restructuring strategy, highlighted the broad interplay of geopolitical and policy upheavals that exacerbate uncertainty. Nearly half of all profit warnings in Q2 cited geopolitical uncertainty or policy shifts, while 40% referenced delayed or cancelled contracts and orders, a record high. Tariffs and global trade disruptions, in particular, have emerged as critical factors impacting confidence, decision-making, and investment decisions among UK businesses.

This growing wariness is not new; in 2024, one in five UK-listed companies issued profit warnings, marking the third highest annual rate since 2000, only surpassed by the pandemic and the dot-com crash periods. The predominant reasons then were contract cancellations, order delays, and rising operational costs. The cautious stance taken by many companies stems from an unstable global environment combined with domestic policy changes, leading to a reluctance to commit to discretionary spending and reinforcing longer-term structural challenges.

High-profile cases have underscored these trends. For example, Frasers Group issued a profit warning following what it described as a “damaging” Budget, with the company attributing a substantial projected profit hit to increases in national insurance and the national living wage. Despite these setbacks, analysts remain cautiously optimistic about strategic progress among some retailers.

Looking back, Q1 2025 on its own saw 62 profit warnings among UK-listed firms, an 11% drop year-on-year, though the proportion of firms warning over the prior 12 months remained elevated at 18%. Contract and order disruptions were cited as the most common cause of warnings, while labour market pressures and geopolitical uncertainty also played significant roles. The months since then have seen these issues deepen further, with tariff disruptions and their economic fallout magnifying underlying weaknesses.

In this challenging landscape, companies will need to prioritise agility and resilience, focusing on operational efficiency and maintaining flexible business models to navigate ongoing uncertainty. Although the retail sector shows signs of strain amid changing consumer behaviour and rising costs, those which adapt their propositions and harness digital tools effectively may yet succeed in a rapidly evolving market environment.

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Source: Noah Wire Services

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The draft above was created using the information available at the time the story first
emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed
below. The results are intended to help you assess the credibility of the piece and highlight any areas that may
warrant further investigation.

Freshness check

Score:
8

Notes:
The narrative reports a significant increase in profit warnings among FTSE-listed retailers in Q2 2025, with seven warnings issued, up from three in Q1 2025. This aligns with recent data from EY-Parthenon, which reported 62 profit warnings in Q1 2025, an 11% year-on-year decrease. ([ey.com](https://www.ey.com/en_uk/newsroom/2025/05/ey-parthenons-latest-profit-warnings-q1-2025?utm_source=openai)) However, the specific data for Q2 2025 is not yet available, making the report’s timeliness uncertain. The narrative includes updated data but recycles older material, which may justify a higher freshness score but should still be flagged. Additionally, the report cites a mix of tariff-related anxieties, geopolitical tensions, and shifting government policies as contributing factors, which are consistent with recent economic analyses. ([cnbc.com](https://www.cnbc.com/2025/01/28/british-firms-plagued-by-profit-warnings-and-sliding-output-in-2024.html?utm_source=openai)) However, the specific data for Q2 2025 is not yet available, making the report’s timeliness uncertain. The narrative includes updated data but recycles older material, which may justify a higher freshness score but should still be flagged. Additionally, the report cites a mix of tariff-related anxieties, geopolitical tensions, and shifting government policies as contributing factors, which are consistent with recent economic analyses. ([cnbc.com](https://www.cnbc.com/2025/01/28/british-firms-plagued-by-profit-warnings-and-sliding-output-in-2024.html?utm_source=openai))

Quotes check

Score:
9

Notes:
The narrative includes direct quotes from Silvia Rindone, EY’s UK & Ireland retail lead, and Jo Robinson, an EY-Parthenon partner. A search reveals that these quotes have been used in previous reports from EY-Parthenon, indicating potential reuse of content. However, no earlier versions show different figures, dates, or quotes, suggesting consistency in the reporting.

Source reliability

Score:
10

Notes:
The narrative originates from The Grocer, a reputable UK-based publication specialising in retail news. The report cites EY-Parthenon, a well-established global strategy consulting firm, as the source of the data. Both entities are known for their credibility and expertise in the field.

Plausability check

Score:
8

Notes:
The narrative presents a plausible scenario of increased profit warnings among FTSE-listed retailers in Q2 2025, citing factors such as tariff-related anxieties, geopolitical tensions, and shifting government policies. These factors are consistent with recent economic analyses. ([cnbc.com](https://www.cnbc.com/2025/01/28/british-firms-plagued-by-profit-warnings-and-sliding-output-in-2024.html?utm_source=openai)) However, the specific data for Q2 2025 is not yet available, making the report’s timeliness uncertain. The narrative includes updated data but recycles older material, which may justify a higher freshness score but should still be flagged.

Overall assessment

Verdict (FAIL, OPEN, PASS): OPEN

Confidence (LOW, MEDIUM, HIGH): MEDIUM

Summary:
The narrative presents a plausible scenario of increased profit warnings among FTSE-listed retailers in Q2 2025, citing factors such as tariff-related anxieties, geopolitical tensions, and shifting government policies. However, the specific data for Q2 2025 is not yet available, making the report’s timeliness uncertain. The narrative includes updated data but recycles older material, which may justify a higher freshness score but should still be flagged. The quotes from EY-Parthenon partners have been used in previous reports, indicating potential reuse of content. The sources cited are reputable, but the overall assessment remains open due to the lack of specific data for Q2 2025.