BusinessCompany NewsRetailers lead improved profitability

Retailers lead improved profitability

Retailers lead the growing trend of dramatically lower profit warnings among companies, according to a recent poll by Ernst & Young.

Link: Drop in company warnings signals ‘easing off’

Andrew Wollaston, a corporate restructuring partner at E&Y, said: ‘Retail spending continues to defy gravity as it has for much of the past two years, buoyed up by rising personal debt and low interest rates.’

Thirty-eight warnings were issued between July and September – down from 89 in the same quarter last year.

The proportion of total warnings issued by companies with a turnover of less that £200m rose to 58% in the third quarter in 2003 from 46% in the previous quarter, while warnings from companies turning over between £201m and £1bn dropped to 26% from 38%.

The firm said stability, among other factors like the recovery in the stock market and realistic forecasting, was behind this trend. Factors like the hot weather and the effects of the Iraq war are believed to have helped the retail sector.

Ernst & Young said it was optimistic and believed the current historically low level of warnings could be maintained into next year.

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