CP’s recent Retail Finance Forum brought together a dynamic group of finance professionals from some of the UK’s biggest retailers, spanning high street giants, hospitality chains, specialist brands, and logistics providers. It was a welcome chance for them to connect and discuss the hot topics shaping their industry.
As always, the Forum focused on providing finance leads with an informal, collaborative roundtable setting full of valuable content and insight. The conversation flowed freely, both around the table and over a delicious lunch, where useful connections were made and ideas continued to spark.
The Forum welcomed Ian Fiander and Richard Crisp from the Financial Reporting Council (FRC)’s Corporate Reporting Review team. They shared key insights from their thematic work on the retail sector, highlighting the FRC’s latest reviews and substantive issues raised with companies over the past year.
THE CONTEXT
Every year the FRC publishes an overview of key themes emerging from corporate reporting reviews carried out. For 2023-2024 the main takeaways included:
- The quality of FTSE 350 reporting remained strong. But a gap appears to be widening between these companies and smaller businesses.
- Improvements are still needed in impairment and cash flow statements.
- The need for clear and consistent disclosure of uncertainties, risks and assumptions remains a priority.
- Climate-related reporting is evolving with its scope continuing to expand.
- Good-quality reporting isn’t about volume – it’s about clarity and relevance.
In terms of substantive issues raised with companies, the top ten concerns have remained largely consistent in recent years, with only minor shifts in ranking. Impairment of assets has held the top spot since 2022, with judgments and estimates (number seven on the list) closely linked to the FRC’s thematic review of the retail sector.
More detail on the FRC’s Corporate Reporting Review activity for 2023-2024 can be found on their website.
RETAIL SECTOR THEMATIC FOCUS
Ian and Richard then shared the key insights from their deep dive into retail sector reporting. Covering several crucial areas:
IMPAIRMENT TESTING
When it comes to impairment testing of property, plant and equipment (PPE), intangibles and goodwill there is a big mix in reporting policies and the approach taken by the retail sector to disclosures. While some retailers are doing well, overall standards need improvement.
A particular area of concern is the allocation of online revenue and its interdependence with in-store sales. This needs to be more clearly explained and justified, especially for multi-channel retailers. Key considerations include:
- How, and how much, online revenue is allocated to stores – what are the relevant touchpoints (e.g. click-and-collect or returns)?
- The data supporting these allocations.
- How central costs, such as website and other IT provision, are allocated.
LEASED PROPERTY
The thematic review highlighted the diversity in the treatment of expired leases that remain occupied indefinitely. IFRS 16 doesn’t provide explicit guidance here, but best practice suggests companies should clearly explain their policies and any significant judgements made.
Accounting policies on determining the lease term are often too generic. Companies should provide specific details on the key factors driving their assessments. Additionally if impairment testing includes projected cash flows beyond lease lives, this could be a key assumption requiring disclosure under IAS 36.
ALTERNATIVE PERFORMANCE MEASURES (APMs)
Retailers frequently use APMs as ‘like-for-like’ and adjusted profit. Where APMs are used, definitions must be clear and consistent throughout the annual report and accounts. Best practice disclosures outline the method used and key adjustments made to reported revenue or profit.
The review also highlighted differing approaches to adjusting items. Some retailers treat property impairments as exceptional, while others see them as ‘business as usual.’ Similarly, some include branch opening/closing costs under restructuring, while others do not. The FRC is keen to see clearer explanations of these choices to highlight differences between companies.
WHAT’S ON THE FRC RADAR FOR 2025-2026
Looking ahead, the FRC’s focus for coming year will likely include investment trusts along with:
- Share-based payments
- Reverse factoring requirements
- Pension surpluses and the varied approaches taken by different companies.
THOUGHTS FROM AROUND THE TABLE
After the FRC session, the discussion shifted to the usual roundtable format, allowing attendees to explore shared challenges, benchmark against peers, and exchange practical insights.
Topics linked to the FRC’s session sparked lively debate – particularly around how much information should be included in annual reports. There was concern that excessive disclosure leads to duplication and the inclusion of non-material information.
Another key discussion point was how FRC guidance filters down to auditors. Many attendees felt auditors tend to be risk-averse, often erring on the side of caution by encouraging extensive disclosures that can feel excessive.
Potential changes to IFRS 9 regarding electronic payments – possibly coming in 2026 – also grabbed attention. These could have major implications for retailers, especially those operating internationally, where online payments aren’t as prevalent and have significant impact on cash flow.
A deep dive into internal controls proved particularly valuable for those still shaping their frameworks. Different approaches were shared, offering helpful insights.
IT was another hot topic, particularly software solutions for managing property leases. Attendees shared experiences of different tools, with the consensus being that the right choice depends on a company’s specific needs – whether it’s for finance teams alone or includes maintenance and other departments, as well as the scale of lease portfolios.
WANT TO JOIN THE CONVERSATION?
Chatham House rules were firmly in place for the Forum, so while we haven’t spilled any secrets, we hope this roundup gives you a sense of the broad range of topics covered.
We’ll be hosting the Retail Finance Forum again, alongside other retail-focused events. Keep an eye on our events page for updates. The Retail Finance Forum is a fantastic opportunity for finance leads in retail to connect with peers, swap insights, and tackle key challenges together.
If you’d like to be part of the next conversation, drop us an email and we’ll add you to our potential invite list. Places are limited to keep discussions engaging and interactive.
Or if anything above has sparked a thought you’d like to explore, get in touch. We’d love to hear from you.
