The week ahead: Worst British retail figures for 25 years? No, just a decade

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It's the biggest reporting week of the year for the retail world as the majority of stores update the market on Christmas trading. There had been fears that retailers had experienced the worst Christmas since Margaret Thatcher won her first election (1979). But analysts now expect trading to be the grimmest for a decade, which is slightly better news - provided they are right.

The City expects J Sainsbury, unveiling third-quarter figures (which includes the Christmas period), to report a slight decline in like-for-like sales.

Wm Morrison, which bought Safeway in 2003, will also update the market. Investment bank Goldman Sachs predicts it will post a 5.2 per cent like-for-like rise in sales, excluding petrol, over Christmas, compared to 2003. But by stripping out the badly performing former Safeway stores, this would have been closer to 10 per cent, they say. Analysts will want to know how quickly the old Safeway stores are being rebranded and integrated into the group.

Clothing retailers should report a mixed performance. Matalan, whose full year end is next month, is on track for a 4 per cent like-for-like increase over the second half so far. This is slightly flattering, however, as it had an awful second half and Christmas in 2003, so the comparatives are relatively easy.

GUS, which owns Argos, was one of the better performers over the festive period if the Argos store on Peckham High Street, south London, was anything to go by (it was so busy on Christmas Eve, police had to control the influx of customers). Analysts expect a 3 per cent like-for-like increase over the third quarter, which would outperform the high street and is up against strong comparatives too.

Shareholders in Burberry, which reported better than expect first-half results in November, will be hoping its more subtle deployment of the famous check has paid dividends as it attempts to distance itself from Burberry baseball cap-wearing hooligans.

Nick Bubb, from stockbroker Evolution , forecasts a 3 per cent like-for like increase in sales over Christmas for Dixons. Profits should be up on 2003, by around 10 per cent to £115m, for the electrical retailer. But margins are expected to fall as competition from other retailers for some of the big-selling items - digital cameras, digital radios - hots up.

Analysts say jewellery company Signet has been a strong performer, and they expect it to notch up a 2.6 per cent like-for-like increase, against a good year in 2003. Clearly, diamonds are still a girl's best friend and her beau better get her one - consumer slowdown or not.

Analysts will want to hear how Carphone Warehouse thinks it can keep growing in a saturated mobile phone market. Making more than two-thirds of its profits in the second half, it is expected to record 20 per cent more connections over the third quarter compared to last year. This isn't bad, but margins will be hit by growing price discounts.

The market is bracing itself for disappointment from computer software and video game company Game Group. A shortage of PlayStation2 and X-box game consoles (most retailers were affected) hit sales, say analysts, who forecast a fall in sales approaching double digits.

In the US, statistics are expected to show that retail sales rose by 1.3 per cent in December on the same period in 2003, boosted by strong car sales.

Away from the high street, Britain and the Continent's central banks are meeting for the first time in 2005 to set interest rates. The Bank of England's Monetary Policy Committee is widely expected to keep rates on hold at 4.75 per cent for the fifth consecutive month. The European Cental Bank is also expected to hold rates at 2 per cent, so don't get too excited on either count.

Still on economics, the Office of the Deputy Prime Minister will report its housing price survey for November. Clues as to the direction of inflation - and with it, interest rates - will be provided with the publication of manufacturing costs and the price of goods leaving factory gates ("output prices") in December. Because oil prices have slipped back, along with those for most commodities, econo- mists forecast a fall of 1.5 per cent in manufacturing costs, which should feed into lower output prices and the price of some goods in the shops.

In Asia, fixed-line operator China Netcom is expected to confirm that it will buy a 20 per cent stake in Hong Kong rival PCCW for up to $1bn (£535m).


Wm Morrison has not confirmed which day this week it is reporting its third quarter figures.

Tomorrow 10

UK: Results: (interim) Monkleigh, Pace Micro Technology

Retail: (seven weeks to 7 Jan) John Lewis

US: Results: (final) Alcoa

Tuesday 11

UK: Results: (F) Cobra Bio-Manufacturing, Parkdean Holidays, SectorGuard

Retail: (third quarter) Topps Tiles; Game Group

US: Results: (F) Intel, M&T Bank; (Q3) Nortel Networks

Wednesday 12

UK Results: Retail: (Q3) Dixons, Burberry, Matalan

US: Results: (first quarter) Apple Computer

Thursday 13

Retail: (Q3) GUS, Carphone Warehouse, J Sainsbury; (Christmas trading) Signet Group; (seven weeks from 10 Oct) Mothercare

US Results: (I) Sun Microsystems

Friday 14

UK: Results: (F) Romag Holdings; (I) Planit Holdings

Retail: (Q3) Peacocks, Body Shop

US Results: (F) Delta Airlines