Europe's retail sector faces challenges

Retail has become the most distressed sector in Europe, surpassing industrial and real-estate companies, according to the latest report by Weil, Gotshal & Manges.

Retail and consumer goods firms in the EU are facing weak household discretionary spending, shrinking profits, and tighter credit conditions. These factors pushed Weil’s European Distress Index up to its highest level since 2009. 

According to the Weil’s study, persistent uncertainty around the US administration’s tariffs has impacted supply chains and negatively affected European retailers exporting goods to the United States.

Additionally, corporate distress in the EU rose to its highest level in nine months in May. Germany remains the most challenged market of all the bloc’s countries, the report says.

European companies are suffering due to the region’s difficult macroeconomic environment, aggravated by geopolitical and trade tensions, as well as volatile financial markets.