The Week Ahead: Huge profits leap in store for J Sainsbury

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The Independent Online

The speed of J Sainsbury's sales recovery has astonished the City. The supermarket group is already more than half way to its goal of adding £2.5bn of sales during the three-year recovery plan it set in 2005. But the proof of the pudding is in the eating - or the extent of the profit uplift it announces on Wednesday with its interim figures.

The magic of operational gearing means seven consecutive quarters of like-for-like sales growth should have ignited the bottom line by now. Citigroup is expecting a 64 per cent jump in pre-tax profits to £193m, which would generate 7.3p of earnings per share. That hope, along with bid rumours, helped to lift shares to a near eight-year high of 420p at Friday's close. The news that Lord Sainsbury, the chairman until 1998, had stepped down as the Science minister to concentrate on his "business and charity" interests only stoked the flames.

Most analysts believe it would be madness for anyone to bid at these levels but that doesn't stop the rumour mill. Alongside its profits jump, Sainsbury's is tipped to announce progress on its goal of opening new stores, possibly by tying up with another retailer as Marks & Spencer did with BP.

TODAY: Results: Full year - Carr's Milling; Diploma. Interims - Latchways; Majestic Wine; Robert Wiseman.

TOMORROW: Vodafone has had a hard time of it of late. The mobile phone giant faces tough competition in its four core European markets. But, analysts believe there is an outside chance of upgrades to earnings forecasts after its interim results, thanks to improving trends in Italy, the UK and across many of its emerging-market operations. Vodafone has among the lowest debt levels in the industry and pays out a relatively small proportion of its profits to shareholders. First- half results are expected to show a 3 per cent rise in earnings before interest, tax, depreciation and amortisation to £6.1bn.

EasyJet is tipped to report a sharp jump in annual profits despite the rise in its cost base caused by the high fuel price and the disruption caused by recent terror scares. Analysts expect a pre-tax profit of up to £130m from the budget airline, compared with £85m last year. EasyJet has been busy adding to its network of European routes over the past year. It now travels to more than 250 destinations.

Are merger cost savings on track at Alliance Boots? That will be the key question when the pharmacy giant posts its interims. In September, the chief executive Richard Baker assured the City the integration of Boots and Alliance UniChem was going to plan. This year's hot weather should have boosted sales as shoppers stocked up on sun cream.

Results: Full year - EasyJet. Interims - Alliance Boots; Babcock; Burberry; Business Post; Emap; InterContinental; Northern Foods; Scottish Power; Vodafone; Viridian; VT Group.

WEDNESDAY: First half figures from Luminar are unlikely to excite. The late-night bars and nightclubs operator is forecast to post a drop in like-for-like sales of about 7 per cent due to the disruption caused by its rebranding programme, the hot weather, the World Cup and the pub industry's moves to cut down on underage drinking. Luminar should have rebranded 12 of its large nightclubs this year. On the whole, refurbished outlets perform very strongly. Interim pre-tax profits should come in at around £16m.

Takeover rumours have surrounded EMI for the past few weeks. If market gossip is to be believed, its management team is working on a 320p-a-share buyout backed by private equity cash. According to the gossip, the multimillion-pound fraud at the group's recorded music business in Brazil was only discovered by directors last month because they were conducting early-stage due diligence. Management can expect many questions about their plans when EMI unveils its first-half results. These should reveal a drop in pre-tax profits of about 56 per cent to £18m, with £9m of this drop being due to its troubles in Brazil.

Analysts raised their forecasts for the IT services firm Dimension Data last week after a strong set of first-quarter results from its US peer Cisco. DiData's exposure to fast growing markets in Africa and South-east Asia can only further boost its performance. Investors can expect it to post full-year pre-tax profits of $58m (£30m), up from $43m last year, on sales of just over $3bn.

Results: Full year - ADVFN; Dimension Data; European Diamonds; Lonmin; Shed Productions. Interims - EMI; Sainsbury's; Land Securities; Luminar; Scottish & Southern Energy.

THURSDAY: Results: Full year - Imperial Innovations. Interims - Contentfilms; National Grid; Investec; Vedanta Resources.

FRIDAY. Results: Full year - None. Interims - Vectura; Supporta; British Energy.

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