The Week Ahead: St Michael will hope the City has the patience of a saint

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The Independent Online

As Britain returns from the Easter visit to the DIY store, the Square Mile is thinking retail. All eyes will be on Marks & Spencer as it tries to put recent troubles behind it. The City is calling for strategic changes, though expectations are muted.

As Britain returns from the Easter visit to the DIY store, the Square Mile is thinking retail. All eyes will be on Marks & Spencer as it tries to put recent troubles behind it. The City is calling for strategic changes, though expectations are muted.

In January, M&S said weak Christmas trading had contributed to disappointing sales, with problems in both its clothing and food divisions. The revival, kickstarted with the appointment of chairman Luc Vandevelde four years ago, appears to have faltered. He is under fire for spending too much time away from head office, and the market fears that product problems and price-cutting have hit growth.

All is not as bleak as the naysayers would have us believe. The director of clothing has been replaced by the flamboyant former Selfridges boss, Vittorio Radice. Job cuts, new product launches and improved sourcing should also help, though it remains uncertain whether this will be enough.

Strategic changes mayhelp in the longer term, but near-term sales still look vulnerable. Wednesday's trading update is expected to show total fourth- quarter, like-for-like sales falling 1.1 per cent, with clothing and home furnishings down 2.4 per cent and food up 0.5 per cent.

Fashion followers with a more refined taste will be hoping that the Burberry success story continues. Kate Moss and Madonna have been seen wearing the label, and Mario Testino, the celebrity photographer, has taken charge of its advertising campaign. The fashion group bucked difficult trading conditions to show healthy sales in its last quarter, and investors expect further positive news from the fourth-quarter trading statement this Wednesday.

This should cheer parent company GUS, which has seen the value of its 66 per cent stake rise by more than £400m since it spun off Burberry two years ago. The retail group, owner of Argos, Homebase and the Experian consultancy, will provide a trading update on Thursday. Shares in GUS have lost ground since the start of the year, with worries over sales growth at Argos and the impact of the weak dollar on US sales.

While the likes of M&S and Argos are relative newcomers to home furnishings, DFS has been operating for some 35 years. But recent comments from its chairman, Lord Kirkham, suggest the new entrants are making the industry more competitive, with conditions becoming "ever more demanding". This has prompted DFS to brace the City for disappointment when it announces interim results below last year's £26.1m. Which makes it all the more surprising that Lord Kirkham is pursuing a plan to take DFS private and pump in £150m of his own money. He has offered £462m, or 430p per share, for the group, but institutional investors appear to be holding out for 450p. Thursday's meeting should shed some light on whether Lord Kirkham's pessimism is justified.

JJB Sports reports full-year results on Wednesday. Its boss, Dave Whelan, the owner of Wigan football club, will have been cheered by this year's near 40 per cent surge in the share price. Despite "sluggish" trading over Christmas, the stock has been buoyed by expanding margins, a share buyback and a big hike in the dividend. Analysts are looking for a pre-tax profit of £87m, against last year's £90m.

Another strong share in recent months has been Associated British Foods. Rumours are rife that the group is looking to do a share buyback, and management can expect to be quizzed about this at Wednesday's interim figures.

Away from results, this week could mark the culmination of the Canary Wharf and WPP sagas. A ruling by the Takeover Panel will resolve the fate of the London Docklands development company by forcing interested parties to provide details of final offers. The two bidders, a Morgan Stanley-led group and a team headed by the development's founder, Paul Reichmann, will enter an auction starting on Wednesday and ending on Friday. Shareholders will then vote on the bids at an EGM on 27 April.

Meanwhile, investors in advertising group WPP will meet on Friday to vote on a bonus plan that would reward executives with up to £112.5m. The meeting was postponed from last Wednesday amid shareholder criticism over the size of the pay packet. The chief executive, Sir Martin Sorrell, is keen to point out that the performance-related scheme aligns management and shareholder interests. He stands to pick up $80m (£44m) over the next decade.

On the economics front, figures will be announced on Monday indicating the strength of high-street spending in March. February's data showed growth of 5.3 per cent year on year, though economists expect this to slow. This is followed on Thursday by data on the state of British industry, and on Friday by unemployment trends.

CALENDAR

Tomorrow 12

UK: Results: Easter Monday, market closed.

Tuesday 13

UK: Results: None scheduled.

Netherlands: Results: (First Quarter) Philips.

US: Results: (Q1) Delta Airlines, Intel, Johnson & Johnson.

Wednesday 14

UK: Results: (Final) Henry Boot, JJB Sports; (Interim) Associated British Foods, St Ives Group.

US: Results: (Q1) Apple Computer, Bank of America, Texas Instruments.

Thursday 15

UK: Results: (F) Wealth Management Software; (I) DFS Furniture.

US: Results: (Q1) Citigroup, IBM, PepsiCo.

Friday 16

UK: Results: (F) Surface Technology Systems.

Finland: Results: (Q1) Nokia.

US: Results: (Q1) E-trade.

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