The Week Ahead: Debenhams to cheer investors after bad year

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The Independent Online

Debenhams has endured a torrid 2007, with the share price almost halving over the past six months. The retail sector was hit by the summer washout, while Debs' investors were also disappointed by the terms of the float and the company's levels of debt.

Yet analysts believe the future is bright. The clothing retailer is set to provide a welcome boost for shareholders as it reports full-year results on Monday. Evolution Securities said its prospects were on the up, placing an "add" recommendation on the stock. The consensus for expected pre-tax profit ranges from £125m to £135m, with a dividend of 6p.

The company has sought to redress the issues that have dogged it this year, accelerating the store refitting and replacing products such as the disappointing menswear range. The analysts said it has a strong expansion pipeline and a raft of new initiatives. Evos backed the Desire by Debenhams format as "an exciting concept", and competitor House of Fraser has announced its intention to use the format. It just has to hope that sales trends stabilise in the short term.

TODAY: Trading update: Pearson.

TOMORROW: Oil prices have dominated the market in the past week, with some observers saying $100 a barrel is a matter of when, not if. The volatility has helped BP and Shell to trade strongly, which should continue this week, according to Ryan Kneale, analyst at BetsforTraders.com. "The record high oil prices are expected to filter through to the consumer market over the next couple of weeks. Combine this with the credit squeeze, things do not look good," he added.

Both are reporting third-quarter results this week, with BP in particular focus. Its share price took a pasting recently on rumours it was to issue a profit warning, and talk – subsequently confirmed – of an overhaul at the group. The consensus income for the third quarter is $3.8bn, down a third year-on-year, but the market is expected to be more preoccupied by an update of restructuring plans.

Also announcing its third-quarter results is the software group Autonomy, with analysts expecting earnings before interest, tax and amortisation to come in at about $24m. UBS said it is also expecting a positive update on the integration of the email archiving business Zantaz, which it bought in July, as well as details of cost cutting measures.

Results: Full year – Debenhams. First half – Abbeycrest. Third quarter – Autonomy; BP; Braemar Shipping Services; Hitachi Capital UK. Trading update – BHP Billiton; Prudential. AGM – Diageo.

WEDNESDAY: The household products group Reckitt Benckiser is expected to put out strong guidance on sales and earnings for the full year as it releases its third-quarter results.

Deutsche Bank said the medium-term growth prospects "remain significant". It also decried the naysayers who – it said – have called the top of its share price for years. The broker added that Reckitt has the opportunity to build its consumer healthcare business to parallel its household goods in size, probably through a similar acquisition to its takeover of Boots Healthcare International in 2005. The consensus for its pre-tax profits is £1.18bn.

The big news at GlaxoSmithKline this month has been the appointment of the successor to chief executive Jean-Pierre Garnier, after a two-year search. Andrew Witty, the bright young hope, beat out the competition and will take over the reins next March.

More immediately, things don't look so bright for its third-quarter results. Analysts at Dresdner Kleinwort pointed out the tough comparatives with 2006, when lowered legal charges pushed pre-tax profits up 21 per cent. The pharma giant has been hit by competition from generic drugs and the safety concerns raised over Avandia in the US; the drug's revenues were $2bn in the States in 2006, but will get nowhere near this year. The broker still predicted top-line growth of 2 per cent, as it has been a strong quarter for its vaccines business.

Home Retail Group is putting out its first-half numbers, which were flagged at an update to be at the top end of expectations. Evos expects pre-tax profits to be up from £113m to £136m.

Results: First half –Home Retail Group. Third quarter – GlaxoSmithKline, Reckitt Benckiser. Trading updates: Friends Provident, Kazakhmys.

THURSDAY: Results: First half – Blacks Leisure Group. Third quarter – ARM Holdings; Royal Dutch Shell. Fourth quarter – Lonmin. Trading updates – Aviva; Partygaming; Reuters. AGM – BHP Billiton; Go-Ahead Group.

FRIDAY: Results: Full year: MJ Gleeson Group. Trading update: Legal & General.

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