Profit warnings across UK-listed retailers rose sharply in the second quarter, as squeezed consumers cut spending and businesses struggled with higher wage costs and ongoing policy uncertainty, according to EY-Parthenon.

Seven UK-listed retailers issued warnings between April and June, up from three in the same period last year. The broader picture showed 59 profit alerts across all sectors, a 20 per cent year-on-year increase.

EY highlighted multiple challenges facing retailers, including the April rise in National Insurance Contributions and the higher minimum wage introduced in the Spring Budget. The firm also noted that shoppers are becoming more value-conscious and less brand-loyal, signalling a structural shift in consumer behaviour.

Silvia Rindone, EY partner, said retailers are caught between falling sales and rising costs, with many reporting long-term pressure rather than temporary volatility.

Smaller businesses, which often lack the pricing power or cash reserves of larger firms, may feel these pressures more acutely. The findings suggest that agility and cost control will be critical in the months ahead.

Beyond retail, the report noted a record proportion of profit warnings citing policy shifts and geopolitical instability, including new global tariffs and ongoing trade tensions. These factors were mentioned in nearly half of all alerts, up from just 4 per cent a year earlier.

Supply chain disruption, currency volatility and cancelled orders also featured heavily. Jo Robinson, EY-Parthenon’s turnaround and restructuring leader, said uncertainty has become a defining feature of the current business environment, with smaller firms especially vulnerable to shocks in demand and rising operating costs.

The second half of the year is expected to bring continued volatility, with EY advising firms to prioritise scenario planning, protect working capital and maintain close oversight of contracts and supply lines.