Retailers' results will offer important clue to direction of interest rates; STOCK MARKET WEEK

With growing evidence shop sales are surging and could tempt the newly independent Bank of England to lift interest rates next month, it is, perhaps, fitting that retailers are due to play a big role in this week's results programme.

May's retail sales recorded a sharp gain. And that was before Halifax and Norwich Union loot became available. With Woolwich due next month and the conversion bandwagon gathering strength all the signs of a relentless spending spree are erupting.

Asda, Great Universal Stores and Harvey Nichols make up the retail contingent.

The superstores chain, producing year's figures on Thursday, is finding itself increasingly under the stock market microscope with a number of analysts extremely cautious.Under Archie Norman, Asda staged a dramatic revival. When he arrived the group was past its sell-by date and seemed destined to fall victim to a rescue takeover bid at a knock-down price.

The shares bumped along at 22p in 1993; a few weeks ago they touched 129p.

The Norman conquest was a remarkable achievement. He transformed the business from the favourite target of stand-up comedians to a highly sophisticated retailing operation challenging the might of Tesco.

But nowadays Mr Norman is a Tory MP, devoting just two days a week to Asda.

There is no doubt the group has a first-class management team and on a day-to-day basis the Norman presence will not be missed. There are, however, worries the inspirational touch, so essential to a big retail player, will no longer be as sharp and Paul Smiddy, analyst at Credit Lyonnais Laing, declared last month: "There is a tone of desperation to some of Asda's trading moves of late."

The market has been ruffled by its short-lived pursuit of the Welcome Break motorway services stations. Its now-ended interest in the up-for- sale Littlewoods stores was regarded as another worrying development.

Thursday's results will be startling; around pounds 420m against pounds 304.6m. But they will include pounds 80m from the sale of a stake in Allied Carpets. Stripping out the Allied windfall, profits will be some 12 per cent higher at pounds 340m.

Tony MacNeary and Mike Dennis, analysts at NatWest Securities, have taken a negative view of Asda for some time and believe the shares should be sold. They see sales growth slowing, margins squeezed and "Asda delivering only limited shareholder value compared to its major rivals".

Great Universal Stores, once known as "gorgeous Gussies" in the market, is expected to suffer the indignity of a profits fall when it reports on Thursday. A 3 per cent decline to pounds 546m is likely.

Under new chairman Lord Wolfson of Sunningdale, the super-secretive catalogue shopping group, a veritable sleeping giant with a huge cash pile, has had an energetic year. It splashed out pounds 1bn, its first big deal for 30 years, for Experian, one of the biggest business information concerns in the US.

So last year's pounds 1.2bn cash mountain will have been seriously eroded although a subsequent property deal with British Land will repair some of the damage.

Lord Wolfson is clearly intent on steering GUS on a much more adventurous course. Many parts of the jigsaw have yet to be put in place. One possibility the market still ponders is an agreed takeover for Next, the high-street trend-setter.

Shares of Harvey Nichols, which has reaped rich rewards from its Absolutely Fabulous association, have lost much of their glitter as the appeal of the stores sector has diminished. Year's profits today should be around pounds 13m, up from pounds 9.2m.

A Harvey Nicks opened in Leeds in October and the Oxo restaurant in London are regarded as the Hong Kong-controlled group's pace-setters. More store and restaurant openings are planned.

Other groups which could hope to enjoy some of the conversion cash include First Leisure Corporation; brewer Greene King and upmarket house builder, Berkeley.

FLC's half-year results tomorrow will create little excitement; they are likely to be near to last year's pounds 16.4m. But the occasion will give the new chief, Michael Grade, the former head of Channel Four TV, a chance to articulate the group's development plans.

It has given the impression lately of no longer being certain about its direction. FLC has flirted with pubs and some feel, despite recent expenditure, is not truly wedded to bingo - a pastime hit by the National Lottery.

Last month former chief executive John Conlan clinched FLC's biggest deal, the pounds 61m takeover of the Riverside health and fitness business. The flamboyant, cigar-chomping new chief is obviously fully behind the acquisition and it could be that he intends to make FLC an even fitter participant in the booming health club world. FLC's last unsuccessful pub excursion was a bid to take over The Magic Pub Co. It lost to Greene King which splashed out pounds 197.5m.

The East Anglian brewer rolls out year's figures on Wednesday and they will contain the first meaningful contribution from the pubs acquisition. NatWest is looking for a 45 per cent upsurge to pounds 35.7m.

Berkeley, planning to transform the old Harrods depository at Barnes into a luxury residential complex, should have enjoyed an exceedingly good year and projections of pounds 61.5m against pounds 43.3m have been made for Thursday's profits.

Another which should reap rewards from the demutualisation movement is Vendome, the luxury goods group. It should produce year's profits tomorrow little changed at around pounds 260m.

Halma, an environmental engineer, may, at best, collect a tiny slice of the conversion bonanza. Even so its results and accompanying statement deserve careful attention. Around pounds 39.5m against pounds 33.6m is expected. Still, any sort of increase tomorrow will ensure the group's 21st year of uninterrupted profits progress. Quite an achievement.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Editor-in-chief - Financial Services - City, London

£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Guru Careers: Management Accountant

£27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...

Guru Careers: Project Manager / Business Analyst

£40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...

Day In a Page

General Election 2015: ‘We will not sit down with Nicola Sturgeon’, says Ed Balls

'We will not sit down with Nicola Sturgeon'

In an exclusive interview, Ed Balls says he won't negotiate his first Budget with SNP MPs - even if Labour need their votes to secure its passage
VE Day 70th anniversary: How ordinary Britons celebrated the end of war in Europe

How ordinary Britons celebrated VE Day

Our perception of VE Day usually involves crowds of giddy Britons casting off the shackles of war with gay abandon. The truth was more nuanced
They came in with William Caxton's printing press, but typefaces still matter in the digital age

Typefaces still matter in the digital age

A new typeface once took years to create, now thousands are available at the click of a drop-down menu. So why do most of us still rely on the old classics, asks Meg Carter?
Discovery of 'missing link' between the two main life-forms on Earth could explain evolution of animals, say scientists

'Missing link' between Earth's two life-forms found

New microbial species tells us something about our dark past, say scientists
The Pan Am Experience is a 'flight' back to the 1970s that never takes off - at least, not literally

Pan Am Experience: A 'flight' back to the 70s

Tim Walker checks in and checks out a four-hour journey with a difference
Humans aren't alone in indulging in politics - it's everywhere in the animal world

Humans aren't alone in indulging in politics

Voting, mutual back-scratching, coups and charismatic leaders - it's everywhere in the animal world
Crisp sales are in decline - but this tasty trivia might tempt back the turncoats

Crisp sales are in decline

As a nation we're filling up on popcorn and pitta chips and forsaking their potato-based predecessors
Ronald McDonald the muse? Why Banksy, Ron English and Keith Coventry are lovin' Maccy D's

Ronald McDonald the muse

A new wave of artists is taking inspiration from the fast food chain
13 best picnic blankets

13 best picnic blankets

Dine al fresco without the grass stains and damp bottoms with something from our pick of picnic rugs
Barcelona 3 Bayern Munich 0 player ratings: Lionel Messi scores twice - but does he score highest in our ratings?

Barcelona vs Bayern Munich player ratings

Lionel Messi scores twice - but does he score highest in our ratings?
Martin Guptill: Explosive New Zealand batsman who sets the range for Kiwis' big guns

Explosive batsman who sets the range for Kiwis' big guns

Martin Guptill has smashed early runs for Derbyshire and tells Richard Edwards to expect more from the 'freakish' Brendon McCullum and his buoyant team during their tour of England
General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'