The Week Ahead: Tesco breaks through £2bn as Marks & Spencer is left behind

This week, Tesco will show all the others just how it is done. A number of retailers are updating the City, but there will only be one supermarket giant unveiling profits of more than £2bn.

This week, Tesco will show all the others just how it is done. A number of retailers are updating the City, but there will only be one supermarket giant unveiling profits of more than £2bn.

It will be the first time in its history that Tesco has smashed through the £2bn mark, with profits up around 21 per cent on the previous year. Annual underlying sales should also be strong, nearly 9 per cent higher (inclusive of petrol), as should current trading. JP Morgan has pencilled in growth of 7.9 per cent for the past seven weeks.

Tesco, it seems, can do little wrong. However, analysts will still want to hear the opinion of chief executive Sir Terry Leahy on the state of the retail sector in the coming months. The chain's overseas performance will also be closely scrutinised.

The other big name reporting in the retail sector is Marks & Spencer, which will be providing an update on sales over the past three months. One key area will be food, as the City is desperate for signs that this area has stabilised after a tough 2004. On the whole, however, the M&S update is likely to be in stark contrast to Tesco's.

There are concerns that trading has been weak throughout the quarter, with early discounting by the high street giant adding to the uneasy mood. Indeed, some analysts are so concerned, they have pencilled in a 6 per cent fall in underlying sales of clothing and homeware. This is despite chief executive Stuart Rose slashing prices in an attempt to close the gap with rivals such as Next. Expect management to blame tough conditions on the high street.

Elsewhere, Argos owner GUS and its spun-out Burberry brand are both updating on trading. Beloved of Chelsea fans everywhere, Burberry - it of the now- ubiquitous beige and red check - is hoping for a pick-up in sales in the fourth quarter. Analysts are eager for good news, however, after a poor third quarter, so any signs of deflated expectations won't be well received.

As for GUS, the state of the high street will be the main topic of debate and its DIY chain Homebase will be particularly closely scrutinised after some recent gloomy reports from rivals. However, the group has a buffer in the form of Experian, its credit-checking business, which should have continued to do well.

Leisure retailer JJB Sports is publishing full-year results. The numbers are unlikely to make pleasant reading, with analysts forecasting a slump from £87.9m to £62m in pre-tax profits before one-off costs.

A number in the City are optimistic, though, that the worst is behind JJB. The clearance of the previous season's stock is now largely complete and new ranges, focused on the bigger sports brands, have been introduced. There is also a more aggressive approach on pricing, while at JJB's other business, health clubs, there has been a dramatic hike in new launches.

However, some things have not changed. Competition is fierce and the consumer is fickle, so analysts will want to hear positive comments from JJB management for the new financial year.

Other retailers updating investors include Moss Bros, Austin Reed, Carphone Warehouse and Clinton Cards, all of which are either providing updates on trading or publishing full-year results.

And rounding off the news from the sector will be the British Retail Consortium's take on March trading. Most are expecting a repeat of the gloomy trend seen in February.

There will also be some key action overseas. In the US, Apple, Citigroup and PepsiCo are reporting, while in continental Europe, dairy giant Danone and French supermarket Carrefour update on sales. But, most significantly of all, it is crunch time in the showdown between shareholders and management at the confectionery giant Nestlé.

The row started a few weeks ago when it was announced that the highly rated chief executive Peter Brabeck would be made chairman as well. In response, a group of angry shareholders put forward a series of proposals - to be voted on at the annual general meeting this week - that would ban such a move. In return, Mr Brabeck has threatened that both he and the board will resign if the proposals are passed.

The company is confident that this will not happen, and most analysts agree. However, most also agree that if sufficient shareholders either vote for the proposals or abstain in protest, that could still leave Mr Brabeck with a bloodied nose.

It is a busy week for AGMs back home, too, with oil giant BP, cruise specialist Carnival and mining group Rio Tinto all meeting investors.

Also updating will be BAA, the owner of Heathrow and Gatwick airports, which is scheduled to publish traffic data for March.

CALENDAR

Tomorrow 11

UK: Results: (final) Independent Media Support Group, M&C Saatchi, Pipex Communications.

Tuesday 12

UK: Results: (F) BNB Resources, Tesco, Thomson Intermedia; (interim) Fibernet, Lok'nStore Group, Next Fifteen Communications.

Wednesday 13

UK: Results: (F) JJB Sports, Moss Bros Group, Premier Research Group; (I) Careforce Group.

Thursday 14

UK: Results: (F) Austin Reed Group, Clinical Computing, Forbidden Technologies, TripleArc; (I) Clearstream.

Friday 15

UK: Results: (F) Emerald Energy, International Energy Group, ukbetting.