The Week Ahead: Marks & Spencer... now let the hard work begin

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The Independent Online

The first full week of trading in the new year is going to be short on results, but long on trading statements. Christmas trading was a mixed bag for the retail sector, but it would be a genuine shock to the markets if Marks & Spencer had anything other than a very merry festive season.

Tomorrow's trading statement from M&S should contain few surprises. Food, drink and general merchandise sales are expected to have remained strong through the past month, with the broker UBS predicting an 8 per cent jump in like-for-like general merchandise sales and a 5 per cent increase in food sales. The Swiss investment bank also expects to see positive comment on margins.

However, despite the spectacular turnaround in the business over the past couple of years, some traders believe that the real hard work begins now. With the shares standing close to an all-time high, having returned more than 100 per cent over the past 15 months, M&S has its work cut out to continue delivering the goods.

TODAY: Strong financial markets should translate into good trading conditions for Michael Page, the executive recruitment group. Although the shares are not cheap, trading on more than 19 times forecast 2007 earnings, a bullish update could see those forecasts increased to pre-tax profits of more than £100m for the year.

Results: No results due.

TOMORROW: After an annus horribilis in 2006, BP shareholders will be hoping for better things in 2007. However, oil looks set for its biggest weekly fall since 2005, which will do little for confidence regardless of what the company says in its trading statement. Investors could be forgiven for thinking things can't get any worse for the integrated oil giant. However, the shares have been in sharp decline for the past 11 months, falling more than 21 per cent, and most traders believe the chief executive, Lord Browne of Madingley, will have to pull a rabbit out of the hat to turn things around in the short term.

Jessops, the photographic retailer, will update the market on current trading and, if the recent share price performance is anything to go by, investors expect a bullish statement.

Results: No results due.

WEDNESDAY: The Christmas retail trading updates continue with trading statement from Morrison Supermarkets, JJB Sports and Experian.

Morrisons, the UK's fourth largest food retailer by market share, enjoyed a good year in 2006 with the shares closing the year almost 36 per cent better, helped in part by buyout rumours. Investors expect to see like-for-like sales growth of approximately 5 per cent, in line with the rest of the sector.

The consumer credit firm Experian, demerged out of GUS in October, is expected to have performed strongly over the Christmas period and its trading statement should reassure investors.

Results: Full year - Cobra Bio-Manufacturing; Mediasurface. First half - Halladale Group; Inter Link Foods; Northgate.

THURSDAY: The music and film retailer HMV Group unusually updated the market on Christmas trading before the festive season was over. It told investors full-year profits would be between £68 and £69m, well below the top-of-the-range forecast of £89m. If anything, news from the rest of the home entertainment retail sector has been even worse with Music Zone looking for a buyer and Games Workshop warning on Friday of last week. HMV, by virtue of being the largest player in the market, should hit its revised targets but the growth in digital downloading puts the entire sector's future in doubt.

Bloomsbury, the publishing group,also warned before today's trading update. It sneaked out a grim warning after the market shut on 11 December, sayingprofits for the full year are likely to be £5m, a huge 75 per cent below consensus forecasts. The seventh and final Harry Potter book is due out later this year, but that is unlikely to be enough to encourage analysts to revise forecasts upwards. With weak Christmas trading at booksellers, traders are expecting another downbeat statement.

November's trading statement from Alliance Boots was in line with expectations, but the real testwill come in 2007. The broker Panmure Gordon has picked the shares as one of its top four "sells" of the year, and believes investors think all of the projected merger synergies will filter straight down to the bottom line. Its update will give the market a clue as to who is right.

Food retailers look to have escaped most of the Christmas high-street woes, and J Sainsbury shareholders will be hoping to hear news of strong trading with sales growth of at least 4 per cent expected.

Results: First half - EBTM; HMV.

FRIDAY: Results -None due.

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