The Week Ahead: World Cup couch potatoes help Sainsbury's to score

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The Independent Online

World Cup euphoria and sunny summer weather are likely to have given sales in the supermarket chain J Sainsbury a boost over the past few weeks. The retailer, which has been stealing market share from its closest rivals as its recovery continues, will provide a first-quarter trading update on Wednesday. The market is looking for more than 5 per cent growth in like-for-like sales during the quarter.

The restructuring of Sainsbury's under chief executive Justin King over the past two years has been largely well received by the market. The World Cup is expected to have been good for business - as it has for all supermarkets - as fans stock up on beer and snacks for the games.

However, growth at Sainsbury's is currently focused on sales, rather than profit margins, which have continued to perform poorly, largely due to heavy price discounting. While the retailer had said in January that it was looking for a margin of 3.5 per cent for the year, last month it indicated this was likely to be closer to 3 per cent.

Overseas, and the Dutch retailer Ahold, which has recently been the subject of break-up speculation, will also be delivering first-quarter results on Wednesday. Here, margins are expected to be strong despite weak sales in the US.

Back home, another retail company thought to have been kicking World Cup-inspired goals is DSG International, once just plain Dixons. It too will be unveiling its full-year results on Wednesday, and pre-tax profits are expected to be in the order of £315m to £320m, down from £333m last year due to sluggish sales of white goods early in the year. Televisions make up 12 per cent of DSG's total group sales. Investors will be keen to know how great a fillip the World Cup has actually been, given mixed reports on TV sales in the lead-up to the tournament.

The outlook for trading, especially in high-definition televisions, will also be crucial. Other strong sellers for DSG over the current financial year are expected to be the next-generation DVD players and recorders, MP3 players, satellite navigation devices and games such as Sony PlayStation 3, according to analysts at Williams de Broë.

Away from retail, and the banking sector will have another strong showing this week, with trading updates from Lloyds TSB, HBOS and Bradford & Bingley. Their reports are likely to provide an insight into the broader health of the economy; comments from other banks last week suggested that the level of bad debts among their customers was increasing.

Lloyds TSB will be the first to discuss the issue of debt levels at its update on Monday. Analysts will be keen to know if insurance protection sales have slowed as the rates of unsecured lending fall.

HBOS is also likely to confirm that unsecured bad debts are on the rise, although this forms only a small part of its business mix. The bank will probably not produce any trading surprises at its annual meeting on Wednesday, since it last provided an update only in April. On Friday, Bradford & Bingley is tipped to report that it is continuing to attract strong volumes in mortgage sales.

Meanwhile, the owner of Premier Travel Inns, Whitbread, is expected to reveal softer trading in its pub restaurants but a 5 per cent rise in like-for-like sales at its hotels business. At the annual meeting on Tuesday, the market will also be looking for an update on the disposal of Whitbread's 250 underperforming pubs, which are set to fetch between £450m and £550m, according to analysts at Morgan Stanley.

Also on Tuesday, the state-supported nuclear and coal-fired energy producer British Energy will be delivering its annual results. The group looks set to provide further information regarding contracts it has negotiated with its wholesale and big corporate clients over the next couple of years. More details of its operational performance, including whether it has had much downtime at its nuclear plants, are also expected to be given. British Energy has already provided a substantial amount of detail on output and costs at its plants in the previous quarter.

From power to engineering: WS Atkins, which holds key public transport maintenance contracts in the UK, will present its full-year results on Thursday. The group is forecast to unveil solid growth and bullish pros-pects for the 2007 financial year. Its Network Rail business is expected to have been a major profit driver in the second half of this year. Atkins' operations in China and the Middle East are also likely to have performed strongly.

Finally, in economics news, the market will be keeping a close watch on deflation figures, which will be released this week, to see if prices have moved below 2 per cent during the quarter.

CALENDAR

Tomorrow 19

UK RESULTS: (final) Acal, Alba, Majestic Wines, Petards, Thus

Tuesday 20

UK RESULTS: (F) Tribal, Halma, Kewill Systems, Warner Estate; (interim) GW Pharmaceutical; (Q4) British Energy

Wednesday 21

UK RESULTS: (F) DSG International, ILX, Trifast, Millbrook Scientific Instruments; (I) Driver

Thursday 22

UK RESULTS: (F) Atkins WS, Dyson, Computerland UK; (I) Crest Nicholson, Research Now

Friday 23

UK RESULTS: (F) Caldwell Investments, Cybit

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