FTSE retailer profit warnings spike amid Middle East conflict

The number of profit warnings issued by FTSE retailers has spiked, as consumers and suppliers alike suffer the economic effects of the Middle East conflict.

Retailers issued five profit warnings in the second quarter of 2026, up from three in the first. 

This marked only the third year since 2007 in which warnings increased between Q1 and Q2, according to EY-Parthenon’s latest Profit Warnings report.

All five warnings referenced the impact of the US-Israel war on Iran and subsequent blockade of the Strait of Hormuz. 

“Retailers entered 2026 with cautious optimism following a stronger festive trading period, but the rise in profit warnings in Q2 shows how quickly conditions can shift,” said EY-Parthenon’s UK&I retail lead Silvia Rindone.

The sector remains “highly exposed” to external shocks, she added, as geopolitical disruption has compounded existing pressures on costs, supply chains and consumer confidence. 

And while headline sales have shown resilience, Rindone put this down to retailers’ heavy use of promotions rather than underlying demand strength.

“The growing divergence in performance across the sector is becoming more pronounced. Businesses able to fund investment in AI, other technology and customer experience are strengthening their competitive position, while others are struggling to keep pace,” she added. 

“This is widening the gap between higher-performing retailers and those facing ongoing financial pressure.”

Of the 59 profit warnings across all sectors of the FTSE list, more than half (53%) cited policy change and geopolitical uncertainty as a leading factor in their need to issue a warning – the highest quarterly proportion recorded under that cause in more than 25 years of analysis.

Nearly a fifth (18%) of UK-listed businesses have given a profit warning in the past 12 months.

Companies listed on the London Stock Exchange must notify investors when they become aware that their financial performance will materially miss market expectations, as part of their legal obligation to shareholders.