Big businesses are struggling – will the Bank of England help out with a cut in interest rates?

Superdry is just one of a legion of companies to issue profit alerts as skyrocketing costs and high interest rates eat into their margins, writes James Moore. What should we expect as the Bank prepares for its latest announcement?

Superdry has said it is assessing ‘cost saving options’ with advisers after reports it was struggling (PA)

Question: what do Motorpoint, JD Sports, Burberry, Watches of Switzerland, Dr Martens, Kingfisher, Superdry, and Ashtead have in common? The answer is that they’re among a small army of big companies to have issued recent profit warnings.

For those who may be wondering what that means, a profit warning is when a firm has to tell the stock market that its earnings are going to be materially below expectations. This they find painful not least because the next step is usually a sharp and painful downward move in their shares as their investors rush for the exit.

The reason why we’re into these weeds today is because EY Parthenon, the consulting arm of the professional services and accountancy giant, has just released its regular profit warning monitor which tracks these announcements. What it found is striking: nearly one in five (18 per cent) of UK-listed companies issued a profit alert in 2023. This exceeds the level recorded during the financial crisis of 2008.