Some 34% of the UK’s publicly listed retailers issued profit warnings in 2025, marking the fourth consecutive year that more than a third of FTSE retailers have had to downgrade their forecasts.
While the number of profit warnings in the sector fell overall in 2025, retailers were hit by a particularly tough Q3 as consumers cut down on spending before the crucial Christmas period, according to the latest EY-Parthenon report.
“Changing consumer behaviour is continuing to make the trading environment challenging, with shoppers trading down, delaying purchases until promotions, and becoming increasingly selective,” said EY-Parthenon UK&I retail lead Silvia Rindone.
“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.”
B&M, Pets at Home, Ocado, WH Smith, Greggs, JD Sports and Associated British Foods were among the largest retailers to issue profit warnings in 2025, with ABF issuing another warning in early January 2026.
Several suppliers were forced to downgrade expectations in the year too. Hilton Foods CEO Steve Murrells left the protein giant in late November 2025 after it had to issue a profit warning, and a mid-summer profit warning kicked off a chaotic half-year at ingredients supplier Treatt, when shareholders rejected a takeover bid recommended by CEO David Shannon. Shannon stepped down at year end.
Most recently, Irish brewer C&C Group was forced to downgrade its profit guidance as cash-conscious consumers cut their booze intake, blaming a “combination of subdued market volumes, unfavourable category mix and competitive pricing dynamics”.
Geopolitical uncertainty drives profit downgrades
While still elevated, the decrease in total number of profit warnings from the FTSE’s retail, personal care, drug and grocery stores reflected a wider stabilisation in business performance against expectations.
UK-listed firms issued 240 profit warnings in 2025, the lowest annual total since 2021, when 203 were issued.
More than ever, however, geopolitical threats, uncertainty and policy shifts became a cause of disruption. More than four in 10 (42%) of profit warnings came as a result of governmental policy change or geopolitical uncertainty – a massive jump from just 12% in 2024, and the highest level recorded in the 25 years studied by EY-Parthenon.
“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,” said EY-Parthenon’s UK&I financial restructuring lead Jo Robinson. “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.”
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