The Week Ahead: ASOS likely to thrive as high street suffers
Monday 30 June 2008
The full-year results for ASOS, formerly As Seen On Screen, will interest those looking for guidance on trends for the resilient online retailer and the sector as a whole. The broker Landsbanki said that as the figures were largely flagged at the pre-close update, the focus will be on the current trading and its outlook.
"While we do not believe that ASOS is completely immune from the current consumer slowdown, we do believe that its youngish customer base will be more resilient through the downturn than the typical high-street shopper," the broker said in a recent preview note, adding: "JD Group, which focuses on the fashion end of the sports retail market and attracts a similar age group, recently reported that like-for-like sales had actually improved in the most recent seven weeks of trading compared to the 4-5 per cent seen in the previous 10 weeks."
The company's plans to launch a dedicated discount site in the autumn also augur well; the ensuing slowdown is likely to bring in customers keen on a bargain compared with the high street.
Today: Sibir Energy, the Russia-focused independent energy group, is due to publish full-year results, and Dresdner Kleinwort expects the company to announce "record" figures, with a 152 per cent hike in net attributable income to $232.6m. Earnings per share are expected to increase by 97 per cent to $0.65.
"We believe the operations update will be keenly awaited by the market, with most interest in how the Moscow city refinery has been performing and whether plans to upgrade it have been finalised," Dresdner said. It added: "Salym reserve upgrades and success from the Koltogorsky exploration could provide positive surprises."
Also today, Drax, the owner and operator of the Drax coal-fired power plant, is due to publish a trading update, and according to Merrill Lynch, the company is well placed to gain "substantial benefit from the recent evolution of wholesale energy prices".
"The interim management statement in May highlighted the improving outlook, but was short on detail," the broker said in a recent note, adding: "The situation has become even more favourable since then."
Merrill expects the update to provide evidence of good trading, which in turn could "prompt large positive earnings revisions throughout the market".
Results/updates: Claimar Care, Myhome International, Accident Exchange, Clapham House, Axis-Shield, Drax, Sibir Energy, ASOS.
Tomorrow: HMV is due to publish results for the year to 26 April, and following a positive pre-close update in May, analysts expect pre-tax profits to come in between £46m and £58m.
Looking ahead, Landsbanki said that while chief executive Simon Fox's turnaround programme is progressing well, concerns remain about the structural pressures posed by "the shift in media towards digital distribution". "The shift to digital music downloads is well underway, with video and film downloads set to become more mainstream through the UK launch of movie downloads on iTunes," the broker said, adding: "Longer term, we feel that gaming will also follow suit ... With the shift to online purchasing and downloading, the need for a large store network with lease obligations becomes harder to justify."
Also tomorrow, the van hire group Northgate is due to publish final results, and analysts expect £85.1m in pre-tax profits.
Results/updates: Research Now, Carpetright, Northgate, HMV.
Wednesday: The housing market turmoil will ensure that this week all eyes will be on Taylor Wimpey, the FTSE 250-listed house builder, which has been in talks for emergency funding this weekend and is due to publish a trading update on Wednesday.
The company has been among the hardest hit as investors, spooked by a string of grim market surveys, flee the sector.
Increasingly bearish analysts haven't helped either. Last week, Credit Suisse hit the alarm button and noted that, with house price declines of up to 10 per cent in 2008 and 2009, "if past trends are repeated we can expect land price deflation of about 50 per cent ... We reiterate our consistent message of 2008 and urge investors to continue to avoid the UK housing sector." The broker pointed out that if land prices were to fall in line with its expectations, Taylor Wimpey's net asset value could decline by 46 per cent.
Results/updates: Terrace Hill, Ashley, Block Shield Corporation, Cybit Holdings, Digital Marketing, Balfour Beatty, Taylor Wimpey.
Thursday: The video game retailer Game is due to update on trading for the first five months of 2008, and Deutsche Bank anticipates news of 21 per cent growth in group like-for-like sales.
"The sell-through of 'third-generation' consoles has been unprecedented, and there should be a larger installed base by year end than the 'second generation' ever achieved," Deutsche said, noting: "This bodes well for software sales in 2009."
Results/updates: Samuel Heath & Sons, NCC, Amec, Game.
Friday: Results/updates: O Twelve Estates, Caledonia Investments.
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