Retail profit warnings remained low in the third quarter as consumer spending remained surprisingly resilient, according to new figures out today.
FTSE retailers issued two warnings from July to September, down from five in same period in 2025, a report by EY-Parthenon revealed.
Ten listed retailers have now warned on profits in 2026, compared with 11 at the same stage of last year, marking the lowest year-to-date total for the sector since 2013.
The broader consumer discretionary sector, which includes household electronics, leisure items, luxury products and other non-essential goods and services, continued to record the highest number of profit warnings of any FTSE super-sector.
Companies in the sector issued 21 warnings during Q3, one fewer than the 22 recorded in the second quarter. Within consumer discretionary, the FTSE household goods and home construction sub-sectors remained the most affected, issuing eight profit warnings during the quarter, including six from listed housebuilders.
JD Sports and Topps Tiles issued profit warnings over the summer as heatwaves disrupted trading.
Across all sectors, UK-listed companies issued 65 warnings during Q3, up from 59 in the previous quarter and the highest quarterly total since Q4 2024.
Rising costs were cited as a leading factor in more than a third (35%) of Q3 warnings – the highest proportion recorded for this cause since Q4 2022 (41%). But the main driver of profit warnings in Q3, for the sixth consecutive quarter, was policy change and geopolitical uncertainty (54%), the highest quarterly proportion to reference this reason in more than 25 years of EY’s analysis.
Two in five warnings (38%) during the third quarter specifically cited the impact of the conflict in the Middle East.
The report identified contract and order cancellations or delays (38%) and weaker consumer confidence (20%) as the other main causes of Q3 warnings. Nearly a fifth (17%) of all UK-listed businesses have issued at least one profit warning in the past 12 months.
“The retail sector’s low level of profit warnings may appear surprising given the range of pressures businesses continue to face,” said Silvia Rindone, EY-Parthenon UK&I retail lead.
“Retailers are contending with rising employment costs, higher financing costs and continued pressure on household budgets, yet warning numbers remain close to historic lows.
“Part of the reason is resilient consumer spending. Retail sales volumes have continued to improve and are broadly back to pre-pandemic levels, but another important factor is the way the sector has adapted over recent years. Many retailers have invested heavily in value, convenience, customer experience and operational execution, which has helped them navigate a challenging trading environment more effectively.”
She added low warning levels shouldn’t be mistaken for an absence of risk.
“We continue to see distress among businesses that lack the capital, flexibility or management capability to adapt. At the same time, many retailers are relying on promotional activity to maintain volumes, while facing growing pressure from wages, energy, logistics and business rates costs.
“The key question is whether consumer spending can remain resilient as households face renewed cost of living pressures and broader economic uncertainty. Forward-looking indicators, including retailers’ expectations for sales, hiring and investment, suggest retailers are becoming more cautious ahead of the final quarter and the crucial Black Friday and Christmas trading periods. As ever in retail, businesses that continue to improve and differentiate their proposition are likely to be best placed to succeed.”
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