The Week Ahead: Heat is on Tesco after rivals' Christmas cheer

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The Independent Online

The round-up of Christmas retail trading statements continues and all eyes will be on the sector's 800lb gorilla tomorrow when Tesco gives the market its Christmas update. For once the heat looks like being on Tesco following a raft of strong trading updates from rivals including Morrison, Marks & Spencer and Sainsbury's.

Tesco's share of the UK food market is almost double that of its nearest rival, Wal-Mart-owned Asda, and anything other than a strong Christmas would be a major shock to the markets. Premium-branded foods have sold well across the sector, and investors expect Tesco to confirm that trend, with like-for-like sales forecast to rise 5.5 per cent.

Outside food retailing, the company is expanding its online retailing capability and embarking on another round of foreign acquisitions and growth. It recently doubled its presence in the Chinese market, and is planning $564m of investment in its Malaysian operations, and clearly does not want to stay the world's fifth largest retailer for much longer.

TODAY: If things are bad at EMI, they haven't been much better at Sanctuary. The music publishing and management group lost Iron Maiden, the band that made the label, back in November, and is currently trying to sell Rough Trade, another iconic British music brand. That said, November's trading statement was better than expected, with chief executive Frank Presland predicting growth in all areas of the business, and the company continues to address a number of outstanding long-term issues.

The copper price has fallen sharply in the first weeks of 2007 but do not expect Vedanta Resources, the Indian copper and zinc miner, to produce anything other than another set of blockbuster numbers. Consensus forecasts are for pre-tax earnings to hit almost $698m for the last three months of 2006.

Results: Full year - Raft International; Sanctuary Group. First half - IG Group; Playwize; Topnotch Health. Third quarter - Vedanta Resources.

TOMORROW: Debenhams has been a major disappointment since coming back to the public markets in May last year after a period in the hands of a consortium of private equity houses. The shares currently languish at a 6 per cent discount to the listing price and the company seems to be losing out to John Lewis, the undisputed department store star of the moment.

December's trading statement made ugly reading, and investors will be hoping for a Christmas pick-up, although most concede that the company is struggling to keep up with its rivals.

Following a string of profit warnings in late 2005 and early 2006, Northern Foods appears to have turned the corner. The shares have rallied from a low of 77.5p to close at 117p last week, and the market will be hoping for more news on asset sales. The company has already made £160m of a planned £200m asset disposal programme. However, recent trading news from food producers has been a mixed bag at best, so now is perhaps not the time to bet the pension on Northern Foods continuing the recovery.

Results: Full year - Domino Printing; IMD; London Scottish Bank; Catalyst Media. First half - AIM Group; Anite Group; Precoat International; Somerfield; Surfcontrol; Tomkins.

WEDNESDAY: Analysts seem to be confident that electrical gadgetry such as flat panel televisions and home cinema systems was among the big Christmas sellers, and interim results from DSG International, owner of Dixons and Currys, will tell them if they were right or not. Tough competition from online sales, a revitalised Kesa Electricals, owner of Comet, and a slowdown in consumer spending could mean that DSG's Christmas was not as merry as some investors are hoping. Look out for news on trading at the company's Italian operations, where a 10 per cent fall in sales, announced in November, led to a 6 per cent fall in the share price.

Last week's initial public offering of Cairn Energy's Indian operations on the Mumbai Stock Exchange could not have got off to a worse start. Making their debut on another weak day for the oil price the shares found few buyers and tanked 20 per cent in early trade before closing 14 per cent worse. In line with the rest of the oil blue chips, Cairn endured a difficult 2006, and despite many analysts believing that the shares now look attractively valued, the momentum is against a short-term rally.

Results: First half - Budgens; DSG International; DTZ Holdings; Reg Vardy; Whittard of Chelsea.

THURSDAY: Results: Full year - Innovata; Online Travel. First half - Bespak; Colefax Group; Fiske; Misys; Pan Andean Resources.

FRIDAY: Results: First half - Kingfisher Leisure; Lawrence; Old Monk.

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