Troubled times on the high street as profit warnings soar

The tough conditions faced by high-street retailers were thrown into sharp relief during the first six months of the year as the number of profit warnings soared, according to new figures published today.

The accountancy firm Ernst & Young said Britain's listed retailers issued 26 profit warnings between January and June, more than those issued during the whole of 2010 and almost twice the number in 2009.

The figures come on the heels of growing signs of trouble on the high street, with well-known names such as Thorntons and Carpetright issuing grim updates.

"The spending boost gained from the long run of spring bank holidays, the fair weather and the royal wedding can only provide a temporary fillip to retailers, many of which are burdened with debt, weakened by snow and under stress from years of tough trading," said Alan Hudson, an Ernst & Young partner and the head of the firm's restructuring unit .

He added that the sector's woes were not dissimilar to the dark days of 2008, when the financial crisis wreaked havoc on the economy. "The actual proportion of listed retailers warning is virtually identical in 2011 as it was in the troubled times of 2008, and future prospects don't appear to be getting brighter," he said. "The next three months will stretch more retailers to the limit as they approach the next quarter rent day and seek credit to stock up for Christmas."

On a more positive note, separate figures from BDO – whose high-street sales tracker analyses like-for-like spending at non-grocery retailers with annual sales of between £5m and £500m – show that while June was dominated by the challenges faced by household names such as Habitat and TJ Hughes, shoppers appear to have warmed to early summer promotions on the high street.

BDO said sales at these medium-sized retailers were up by 2.6 per cent during the five weeks to the beginning of July, which, though positive, is still below the 4 per cent result seen in June last year.

Fashion sales were up by 0.7 per cent last month, while homewares experienced the biggest boost from seasonal promotions, growing by 14.7 per cent. Non-fashion sales climbed by 4.1 per cent during the same period.

The figures offer a hint of optimism for the remainder of the year, said Don Williams, the head of retail and wholesale at BDO.

"There have been warnings in the media of a 'black September' for the high street, but these figures suggest the market will remain steady, if uninspiring, until the Christmas season," he added.

He did, however, warn that the prevailing pressures weighing down on consumer spending – such as inflation, tax and job security – are unlikely to change between now and the end of the year. Mr Williams also highlighted the lack of major public holidays, such as the one to mark the royal wedding, to boost sales during the remainder of this year.

He explained: "The only other factor that can have a universal effect on the high street is the weather, but even that is unlikely to spark variations of more than 2 per cent. Retailers will still have to work hard to encourage cautious consumers to spend. This environment will polarise the operators; the strong will benefit, but the weak will fail."

Start your day with The Independent, sign up for daily news emails
News
i100
Arts and Entertainment
Billie Piper as Brona in Penny Dreadful
tvReview: It’s business as usual in Victorian London. Let’s hope that changes as we get further into the new series spoiler alert
Life and Style
A nurse tends to a recovering patient on a general ward at The Queen Elizabeth Hospital in Birmingham
health
News
science
Arts and Entertainment
No Offence
tvReview: No Offence has characters who are larger than life and yet somehow completely true to life at the same time spoiler alert
News
Chuck Norris pictured in 1996
people
ebooks
ebooksA celebration of British elections
Arts and Entertainment
Sarah Lucas, I SCREAM DADDIO, Installation View, British Pavilion 2015
artWhy Sarah Lucas is the perfect choice to represent British art at the Venice Biennale
News
A voter placing a ballot paper in the box at a polling station
i100
News
people
Arts and Entertainment
The Queen (Kristin Scott Thomas) in The Audience
theatreReview: Stephen Daldry's direction is crisp in perfectly-timed revival
Sport
football
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant - Swiss Banking and Finance

£20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...

Ashdown Group: Marketing Executive - 6 month FTC - Central London

£25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...

Ashdown Group: Junior Project Manager (website, web application) - Agile

£215 per day: Ashdown Group: Junior Project Manager (website, web application ...

Guru Careers: Software Engineer / Software Developer

£40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...

Day In a Page

General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'
Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

Flesh in Venice

Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
11 best anti-ageing day creams

11 best anti-ageing day creams

Slow down the ageing process with one of these high-performance, hardworking anti-agers
Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

Juventus vs Real Madrid

Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

Ashes series looks a lost cause for England...

Whoever takes over as ECB director of cricket, says Stephen Brenkley
Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power