Recession hits retailers hard

More than 70% of companies in the UK warned that their profits over the last three months would be lower than expected.88 UK based companies issued profit warnings compared to just 51 in the third quarter of 2011. Especially retail and service based companies seem to have been hit by the latest effects of the recession. According to Ernest & Young retail companies with old business models and without the ability to adapt are going to be the main victim of the recession. Add that to the fact that these companies have already been hit by spending cuts and the result is that lots of companies will be reporting lower profits or even losses.

In 2011 39 retail companies have reported profit warnings, more than 2009 and 2010 together. And now in 2012 it seems even big supermarkets such as Tesco are in trouble. They recently put out a careful warning saying that the profits would be ‘’ around the low end’’, now they have adjusted this to ‘’ a slight loss is to be expected ‘’.

My reaction

This does not come to much of a surprise to me since loads of companies are suffering to the recession and now even large retailers seem to feel the effects. In these times it seems only companies who are able to adapt are able to survive and actually grow. These times ask for managers and CEO’s who are not afraid to take drastic measures.

http://www.bbc.co.uk/news/business-16657016