The Week Ahead: Some shops glow, others feel the chill

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Excuse the pun, but retailers are set to dominate investor shopping lists this week as a raft of sector giants update the City.

Representing the fashion retailers are Next and French Connection in the UK, both of which post interim figures, and Spanish group Inditex, owner of the Zara chain. Most analysts are expecting a strong set of results from Inditex, with Deutsche Bank, for example, predicting impressive sales growth of nearly 17 per cent. The UK could prove a stickier market, however, as British shoppers wilted in the summer heatwave.

Yet while high fashion may not suit sunny weather, other retailers are expected to have cleaned up. For example, B&Q's owner, Kingfisher, is likely to show how it benefited from strong demand for garden furniture, barbecues and other fine-weather products. The mild spring is also expected to have worked in its favour, luring the green fingered into their gardens, while the UK's love affair with home-improvement continues to go from strength to strength. The City is pencilling in half-year pre-tax profits that range from £277m to £290m for the DIY arm.

Kingfisher recently spun off its electrical arm and Kesa Electricals, as the owner of Comet in the UK and Darty in France is now known, is also posting interim figures this week. The results, the first since the demerger, are likely to be pored over with even more interest than Kingfisher's. In particular, the City will want to hear from the management on current trading and the outlook for the rest of the year.

The final tranche of retail updates comes from the supermarkets: Tesco, the UK's largest, and Wm Morrison, which kickstarted the protracted takeover wrangle for Safeway with its agreed bid at the start of 2003. Tesco's first-quarter trading update showed strong underlying sales growth that beat forecasts. A similarly bullish performance is expected for the latest three months; supermarkets, selling ice-cream, Pimm's and cheap T-shirts, can only have benefited from the heatwave. Wm Morrison is similarly expected to have been bolstered by strong demand for seasonal produce, though it is by no means as big in non-food retailing as Tesco.

Those hoping for a major strategic update from either supermarket will be disappointed. That is understandable, however: neither can say much before the publication of the Department of Trade and Industry report on their Safeway bids at the end of this month.

Not everyone loves shopping and thankfully, for them at least, retail is not the only sector reporting. Following on from BAE Systems' results last week will be Cobham in the UK and Thales in France. Cobham is expected to show strong progress in the first half but investors will be more eager for an update on how funds from a recent £105m share placing are being used. At the time, the group said it would use the cash to pay down debt and fund acquisitions.

Also reporting this week is Carnival, the dual-listed cruise giant that last year won a lengthy battle for the hand of UK's P&O Princess. Its third-quarter figures, out on Thursday, are likely to show a robust recovery in bookings and continued optimism in the outlook for the final quarter of the financial year. Americans may not want to fly, but cruising, it would seem, remains as popular as ever.

This week marks the end of the interim reporting season yet much remains for investors to ponder in the economic field. The US Federal Reserve announces its decision on interest rates on Tuesday; commentators are expecting them to be left on hold at 1 per cent but the accompanying statement will be pored over as economists try to fathom what the Fed plans to do over the coming months. It's a similar story in the UK, where the Bank of England's Monetary Policy Committee publishes minutes from its September meeting. Then rates were, as expected, left on hold and economists will now be watching for any arguments between MPC members over if and when the cost of borrowing should begin to head north again. Few, however, are expecting an imminent hike. Says Investec's Philip Shaw: "Our central view is that while rates have probably troughed, we do not see rates rising until next summer."

Other key economic events include the Royal Institute of Chartered Surveyors' house price survey for August, the latest industrial trends survey from the CBI, unemployment data, retail sales and today's euro referendum in Sweden, which goes ahead despite the tragic death of foreign minister Anna Lindh last week.

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