While Ryan is doing a fine job putting some perspective on the ECB stress tests I’ve been trawling around looking for some other week-end reading and this story caught my eye.
And it’s rather gloomy news I’m afraid as Ernst & Young have issued a report noting that firms quoted in the UK issued 69 profit warnings in the third quarter of 2014, up from 56 in the same period in 2013.
It is the highest Q3 level since 2008 and include supermarket giant Tesco (unsurprisingly) and retailer Next.Profit warnings are issued by listed companies to alert investors that profits will be lower than in the previous year.
The FTSE sectors issuing the highest number of profit warnings in Q3 2014 were Support Services (10), Software & Computer Services (6), Construction & Materials (5) and Media (5) – highlighting the pricing and competitive pressures faced by the contract-reliant. The pace of structural change in the UK economy is epitomised by food retailing, currently in the midst of a generational shift in spending patterns. FTSE Food & Drug Retailers sector issued six profit warnings in the first nine months of 2014, its worst period since 2005.
The report notes that
New entrants, new technologies and shifting consumer behaviour continue to challenge established business models and nowhere is this more visible right now than in food retailing.
The pressure on sales and margins is largely focused on established supermarkets, struggling to adapt to the move away from the big weekly shop and the challenge posed by an expanding group of warehouse, supermarket and high street discounters
Profit warnings have continued apace from the third into the fourth quarter.This implies that at best companies and markets are misreading the post-crisis economy and are struggling to adapt to rapid structural changes, and at worst have once again over-estimated the pace and nature of this recovery.
I guess they must have missed a few posts and comments here on ForexLive then.
Full and very detailed report from E&Y here
