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Retailers issue record profit warnings

Retailers issued the most profit warnings of all the companies in the FTSE All-Share index during the first three months of this year, according to a report by Ernst & Young.

UK plcs had 114 profit warnings in the first quarter of 2008, the highest first quarter figures since 2001 and up 11% from the first quarter of 2007.

The highest warning sectors were general retailers with 18 profit warnings. The report said that profit warnings remained above the 100 mark for the second quarter in a row, driven by the deepening impact of the credit crunch and a record number of retail warnings.

Ernst & Young restructuring partner Andrew Wollaston said: "It would be reasonable to expect more of the same, if not worst, for the rest of 2008. The base rate is expected to continue to fall gradually in 2008, but the same inflationary pressures that will limit the ability of the Bank of England to lower rates, will also eat into the benefit of any rate cut for the consumer. The period of economic uncertainty may even persuade individuals to increase savings from their histories lows, leaving retailers even less optimistic of the disposable income pie."

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