The Week Ahead: Market looks to retailers for Christmas caution

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The market is likely to renew its focus on consumer trends as several retailers, including Debenhams, issue updates this week.

The high-street chain is due to publish its full-year trading statement tomorrow, and investors are likely to scrutinise the outlook for any signs of caution, particularly as we're nearing the key Christmas selling period.

Execution Noble points out that last week's 25 per cent sale event "caused some concern that trading has been worse than management is budgeting for", though the move "could also be part of the annual markdown budget". "We expect consumer confidence to remain weak over the new few months as consumers come to terms with the impact of public-spending cuts set to be announced in October," the broker said last week.

Bigger peer Next will follow with half-yearly results on Wednesday and, once again, comments on the road ahead are likely to be in focus. "CEO Simon Wolfson's comments will, as always, be watched with interest," Execution said. "Given that he had already flagged a 'noticeable cooling in demand', investors will be looking for reassurance that trends have not deteriorated further." Deutsche Bank also weighed in, highlighting the importance of any news on margins. The broker said that while Next has indicated that it expects selling prices to rise by 5 to 8 per cent in January – following on from the planned rise in VAT and higher input costs – it "did not make clear whether it was planning to absorb any of the costs through a lower gross margin".

Results/Updates: Kentz and Associated British Foods.



Tomorrow

Cello, the AIM-listed market research and consulting group, is set to post its interim figures tomorrow. The numbers follow an encouraging pre-close update, which flagged double-digit growth in operating profits over the first half, according to Altium.

"Research and consulting activities (around 62 per cent of revenue) have made strong progress, driven by revenues from the US, the healthcare sector and an impressive list of new clients," the broker said. "Significantly, this momentum, a 'strong pipeline of committed work' and earlier cost reduction is expected to be more than offset by any public-sector weakness (around 15 per cent of revenue)."

Results/Updates: Ashmore, Hilton Food, Cello and Debenhams.



Wednesday

Construction and house-building firm Galliford Try is due to publish its annual results on Wednesday and land buying will be in focus, with Numis pointing out that the company's ambitious target of doubling volumes by 2012-13 will be driven by its ability to purchase land at a good gross margin.

"There are clear signs that many in the housing sector are now also back in the land acquisition market so Galliford's progress in this regard will be important," the broker said.

Results/Updates: French Connection, Galliford Try and Next.



Thursday

Kingfisher, the owner of B&Q, will unveil its half-yearly numbers later this week and as with its peers, comments on the outlook, particularly in the UK, promise to be among the key talking points. Looking back at the third quarter of last year, Deutsche Bank said B&Q's like-for-like sales were higher, but margins fell on the back of a clearance of old stock. This time round, the broker expects the trend to reverse, with sales forecast easing, although margins are expected to climb, driving a 25 per cent rise in B&Q's profits.

Centaur Media, the publisher of Marketing Week, is due to post its full-year numbers this week and, following on from an encouraging pre-close trading statement in July, Numis is expecting pre-tax profits of £3.5m, with 1.8p in earnings per share.

"Advertising revenues in the six months to June were 10 per cent ahead, compared with 5 per cent in the four months to April," the broker said. "Within this, marketing and legal were strong, and recruitment advertising rebounded by 20 per cent....Encouragingly, the group stated the recent improvement in trading had continued into fiscal 2011."

Also on Thursday, the construction group Kier is due to issue full-year results, and while the market may be holding its breath ahead of the Government's autumn spending review, Numis reckons the company will be able to "point to several factors which will enable [it] to outperform what is likely to be weak macro backdrop".

The broker highlighted Kier's strong position in construction services with local authorities, which is expected to provide a boost as the Government's cost-cutting drive leads to "larger scale contracts with key providers... Kier's positioning across housing, construction and support services puts it at the forefront of this area," Numis said.

Results/Updates: Bluebay Asset Management, Centaur Media, Kier and Kingfisher.



Friday

Results/Updates: None

ECONOMICS DIARY

Today

BRC-KPMG London retail sales monitor Regional PMI data

CML regulated mortgage survey



Tomorrow

RICS house price balance

Monthly inflation figures

DCLG house price report



Thursday

Monthly UK unemployment figures

Scottish retail sales monitor

Mervyn King, the Governor of the Bank of England, is scheduled to speak to the Trades Union Congress, Manchester



Friday

CBI monthly industrial trends survey

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