The Week Ahead: Retailers crave a rate cut, or it'll be cold turkey this Christmas

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The Independent Online

Retail is not for the faint hearted, and this week's round of updates and results will only highlight why the sector is clamouring for lower interest rates. The British Retail Consortium (BRC) releases its September sales growth data tomorrow - and it is unlikely to be pleasant reading.

Outlook statements will be crucial to share price reaction, but don't expect any near-term miracles. Kevin Hawkins, the BRC's director-general, believes that "a further [interest rate] cut between now and Christmas is necessary if we are to see any positive change".

Marks & Spencer, reinvented under its chief executive, Stuart Rose, is seeking to prove that a few weeks of solid trading, a snazzy autumn line and some flash new stores are no aberration. With shares approaching the magic 400p mark, the price Philip Green said he would offer in mid-2004, M&S clearly needs to bounce back from the first quarter's soft sales result.

But this week's trading update is merely management's first hurdle. The group's interim results on 8 November will be the real test. According to Nick Bubb of Evolution Securities, a central challenge for M&S is to "make sure that people haven't been buying just the value lines".

Only weeks after dumping Kate Moss, Burberry may also be facing the loss of its chief executive, Rose Marie Bravo. Rumours flooded the market last week that the well-regarded American would step down in 2006 after the long-promised selldown by its majority shareholder, GUS. Her departure threatens to overshadow what promises to be a healthy second-quarter sales update.

GUS itself comes under the microscope next week with an interim sales update. Of the three key businesses - Experian, Argos and Homebase - most is expected of credit scoring company Experian after a strong first quarter. While like-for-like sales at Homebase are tipped to be down, the business is travelling better than competitors such as Kingfisher.

This week should, finally, see an end to the Somerfield take-over saga. The Takeover Panel has set a deadline of this Friday for those interested in the supermarket chain to "put up or shut up". London & Regional dropped out of the race last week, leaving the way clear for Robert Tchenguiz, Apax Partners and Barclays Capital.

Another casualty of fading discretionary spend is likely to be JJB Sports. With replica clothing less popular, unseasonal weather and little movement on cost control, analysts at Investec are forecasting a 9 per cent slide in like-for-like, first-half sales and £15.5m taxable profit, compared with £28m last year.

WH Smith reveals its full year profits this week. Williams de Broë analyst Freddie Smith is forecasting a pre-tax profit of £71m. Given management's full briefing earlier this half, there are likely to be few surprises. Investors will focus on the group's outlook statement - particularly the all-important "back to school" trading and what the Christmas period holds in store.

Mothercare will be looking for a non-UK boost for its sales update. While UK sales figures are likely to be down on a like-for-like basis, the market expects a far stronger showing from the international division.

Struggling Body Shop International has already flagged a 25 per cent decline in its interim profit due to buying out franchisees in the past year. A successful Christmas period is a must for management, given the second-half earnings skew.

Analysts are sceptical about the figures Peacock will produce in its sales update this week. With the retailer targeted by a hedge fund, observers believe management may be tempted to take the foot off the accelerator. "The risk is to the downside" one analyst said.

Fresh from finalising the acquisition of Bavaria in South America, brewing group SABMiller updates the market on second quarter volumes this week. Under scrutiny will be the group's European result - especially its relative performance against Heineken.

Convenience foods supplier Northern Foods, maker of Goodfellas frozen pizzas, is expected to produce a steady interim trading update - assuming that competition and rising input prices do not eat into the promised cost savings.

With the high level of interest in online gambling, investors are looking for reassuring noises from SportingBet, the acquisitive gambling stock, when it reports figures on Wednesday.

BAA, the world's biggest airports operator, is likely to produce improved September traffic figures, bouncing back from August's Gate Gourmet disruption. During fiscal 2006, BAA is forecasting 3 per cent growth in passenger numbers.

French retailing giant Carrefour is posting third-quarter sales figures this week. JPMorgan analysts estimate the group will produce organic growth of 3.4 per cent, a slight improvement on previous periods.

CALENDAR

Tomorrow 10

UK: Results: (final) YouGov, Neutec Pharma.

Tuesday 11

UK: Results: (F) St Ives Group, Air Partner, Manganese Bronze, ADVFN; (interim) N Brown Group, Rugby Estates, Intermediate Capital Group, Premier Research Group, RDF Media.

Wednesday 12

UK: Results: (F) Sportingbet; (I) JJB Sports, Watermark, Moss Bros, Asian Citrus Holdings.

Thursday 13

UK: Results: (F) WH Smith, Carter & Carter; (I) Body Shop International.

Friday 14

UK: Results: none scheduled.

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