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Gloucestershire Business News

Profit warnings outstrip 2019 inside six months

Almost 50 per cent more profit warnings were issued by retailers in the first half of 2020 than the whole of last year.

The latest Profit Warnings Report by EY showed nine FTSE-listed retailers issued warnings in the second quarter, taking the total for the first six months of the year to 47.

That compares to 32 for the whole of 2019.

Of this year's warning's 36 cited the coronavirus pandemic as the reason for the lowering of profit expectations with 17 of them coming from specialist retailers.

EY UK consumer leader Mona Bitar said: "The impact of COVID-19 has dramatically accelerated the shift in consumer behaviour, requiring retailers to adapt at an extraordinary pace.

"Retailers cannot afford to continue as usual in the hope normality will resume soon, almost all will need to undertake some transformational and turnaround activity to help see them through."

She said consumer confidence is on the rise with more people feeling more comfortable heading to the shops according to EY's Future Consumer Index.

"Retailers will need to factor in a likely fall in consumer spending in the second half of this year, triggered by a predicted rise in unemployment following the wind down of the Government's furlough scheme.

"Driving growth will be tough. To thrive in this next era, retailers must look to truly integrate their online and offline channels or risk running two parallel business models with reduced productivity across both, splitting capital and overall investment activity."

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