The Week Ahead: Wet summer casts a cloud over fashion chains

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Interim results from Next and French Connection tomorrow should answer the question that has been on every retail analyst's mind: Has this summer been a washout for clothes retailers?

Interim results from Next and French Connection tomorrow should answer the question that has been on every retail analyst's mind: Has this summer been a washout for clothes retailers? Williams de Broe fears that the unseasonal summer weather has held back sales across the industry and that it is likely to have made things particularly difficult for French Connection, which is already said to be struggling as its famous FCUK brand starts to lose lustre.

Profits at French Connection are forecast to rise to just £14.4m from £13.7m last year. However, should the group manage to top this, brokers predict a stellar performance by its shares in the weeks ahead. They have dropped back from their June all-time high of 497p to close at 377.25p on Friday as investors brace themselves for an uninspiring set of figures.

Next stock on the other hand stands within a whisker of its all-time high as the City remains comfortable with the company's strategy and market position. Growth at Next is based on larger stores replacing smaller units, thereby increasing selling space but pegging costs through greater use of cheaper upper floor space. Next profits are forecast to rise to at least £146m from £123m last time around.

TODAY: Results: Full year - Albemarle & Bond. Interims - Deal Group Media; Enterprise; Television Corp; TripleArc. Bisichi Mining.

TOMORROW: Investors can expect another strong jump in interim profits from Redrow. Analysts are forecasting the housebuilder to deliver a pre-tax profit of £122m, up from £106m in 2003. Williams de Broe believes that the company's strengths lie mainly in its strong land bank, its production efficiency and its low average build cost. Although there will be pressure on these advantages this year, the broker believes Redrow's lead is sustainable.

Results: Full year -Caffe Nero; Regent Inns; Redrow. Interims - Advanced Medical Solutions; Catlin Group; Clinical Computing; Cobham; French Connection; Future Network; Gresham Computing; Hiscox; MoneyBox; Next; Vanco.

WEDNESDAY: According to last week's dealing room gossip, Restaurant Group has enjoyed good trading across its three main divisions and the company's interim results will not disappoint. Arbuthnot Securities forecasts pre-tax profits to come in at £7.9m, up from £7m last time.

Over the past two years things have been gradually improving at Parity, the IT services group. In 2002, three out of the company's four divisions were barely profitable. By 2003 they were all pretty much into the black, helped by the cyclical recovery in its markets. Parity's first half results are expected to show further evidence that the group's recovery is on track, with profits tipped to rise to £1.8m from £500,000.

Results: Full year - Eidos; Manpower Software. Interims - Hot Group; Huntleigh Technology; Parity; Restaurant Group; SkyePharma; Unite Group; Xaar; Wireless Group.

THURSDAY: Since Corus' trading update in June, steel prices have continued to rise. Hence, brokers are expecting Corus' interim results to be accompanied by a confident outlook statement. Pre-tax profits should come in at about the £160m level, compared with a loss of £36m in 2003.

Some in the City are hoping for news about Corus' plans for its Teesside slab mill and an indication of what it intends to do with its European aluminium business.

The bid premium in Kingfisher's share price has evaporated along with the rumours of a bid for the group from either Home Depot or Lowes. However, the performance of the business is strong and Kingfisher will post a healthy jump in first half pre-tax profits to about £340m from £309m. The poor summer weather is expected to have had a modest impact on the company's performance.

Results: Full year - Antisoma; Charterhouse Communications; Freeport; Hereward Ventures; Wilmington Group; Ultimate Leisure. Interims - Aggreko; Corus; Cox Insurance; Entertainment Rights; Geest; Kingfisher; Premier Oil; S&U; Trafficmaster.

FRIDAY: Carnival, the cruises giant, complained earlier this week that Hurricane Frances would negatively impact its fourth quarter, and downgraded its forecast earnings. However, this is a one-off issue for the company. Carnival's booking levels remain strong and its third-quarter results will show this. Falling oil prices are also good news for Carnival, although investors should not get overexcited as fuel costs are a relatively small part of the company's cost base. Earnings should have risen by 32 per cent during Carnival's third quarter.

Results: Full year - PM Group. Interims - Carnival; SVB Holdings; Ukbetting; Vernalis.

Economics Diary

TODAY: UK - producer price inflation (Aug); ODPM house price survey (Jul). G10 - central bankers meet in Basle.

TOMORROW: UK - inflation (Aug). Germany - ZEW business survey (Sep). US - current account balance (Q2); retail sales (Aug).

WEDNESDAY: UK - average earnings (Jul); unemployment (Aug); speech by MPC member Marian Bell. US - Empire State manufacturing survey (Sep); industrial production (Aug).

THURSDAY: UK - retail sales (Aug). Eurozone - inflation (Aug). Switzerland - interest rate decision. US - inflation (Aug); weekly jobless claims; Philadelphia Fed survey (Sep).

FRIDAY: Eurozone - industrial production (Jul). US - Michigan consumer sentiment survey (Sep).

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