MORE than 100 UK companies issued profit warnings in the first quarter of the year, the first time in six years that the total for the period has reached three figures.

Worst hit were retailers, which gave 18 warnings over the period. Companies listed on AIM, the lightly regulated junior London stock market, made 63.

The jump has been uncovered by Ernst & Young’s (E&Y) regular analysis of profit warnings.

In the first three months of 2007, the professional-services firm found that 103 companies issued warnings, up from the 88 recorded in the previous quarter, and the 85 posted in the same quarter last year.

The last time there were 100 warnings in a single quarter was in 2005, when rapidly rising oil prices took their toll.

The last time there were 100 warnings in the first three months of a year was back in 2001.

Keith McGregor, corporate-restructuring partner at E&Y, said: “It is too early to say whether we have reached a turn in the cycle for UK plc, but it is clear that some sectors are showing signs of distress.”

He added that while in 2005 spiralling oil prices were the obvious culprit for the surge in warnings, there did not seem to be a single obvious culprit this time round.

“It is not really clear why it is happening, because most corporate signals are positive — companies’ profitability is high, and the general economic outlook is benign. It may be that for some reason companies are not as good as they were at forecasting their figures,” said McGregor.

Retail was the obvious problem, with 18 companies warning profits would not be as strong as expected, the highest total ever recorded by E&Y for the sector.

Alan Hudson, another E&Y restructuring partner, said there was some evidence that retailers had enjoyed a better than expected Christmas, but then struggled in January and February.

While figures for the number of people shopping looked healthy, retailers were having to cut prices and promote heavily to attract buyers, he said.

There were also signs that internet retailers were stealing more customers from the high street. “People now go to a specialist shop to learn about a product, then go home and buy it online after using a price-comparison site,” Hudson said.

Profit warnings from AIM were sharply up, to 63 compared with 38 in the last quarter. But E&Y points out that in terms of the percentage of AIM companies making warnings, the junior market has actually fared better over the past 12 months than the main London stock market.

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