The retail sector will be back in focus this week, as the Currys and PC World-owner DSG International prepares to post a first-quarter trading update tomorrow.
Despite growing talk of a recovery in the wider economy, Citigroup expects trading to have remained lacklustre, highlighting the continued weakness in the European electrical retail markets over the summer. Nomura is also cautious, saying that macroeconomic data and store visits both suggest that conditions have not improved since the fourth quarter.
"We expect a similar run rate to the fourth quarter, within which group like-for-like sales were down around 11 per cent," Nomura said in a preview published last week. "Macro data in the UK, Greece and Spain remains weak while UK store availability appears lower due to tight working capital management."
Today: Results/updates: Scott Wilson and Dechra Pharmaceuticals.
Tomorrow: Hargreaves Lansdown is due to post preliminary results tomorrow, and Numis expects the company to announce £71.6m in pre-tax profits for the 12 months to the end of June, an improvement of 17.5 per cent on the year before. Earnings per share are forecast to climb by 21 per cent to 10.9p. "We believe delivering a 21 per cent increase in earnings against a backdrop of the [FTSE] All Share index declining 23.9 per cent over the year is a very creditable performance assisted by a very strong cash margin," the broker said, maintaining an "add" stance ahead of the results.
Results/updates: Hargreaves Lansdown, Eaga, IQE and DSG International.
Thursday: Panmure Gordon expects Hays to hit £155m in pre-tax profits, with 7.9p in earnings per shares, when the FTSE 250-listed staffing group posts preliminary results later this week. Cash generation should be very strong, with Panmure anticipating news of a small net cash position.
Looking ahead, the broker foresees continued pressure on forecasts, as trading is likely to remain tough.
"Hays appears to have acted more quickly on reducing costs than some of its peers, although headcount did continue to fall in the fourth quarter as demand patterns continue to shrink," Panmure said. "In terms of its geographical mix, we would expect to see little in the way of green shoots in its UK division, while we suspect Europe continues to be in free-fall mode with conditions in Asia and Australia remaining tough."
Citigroup expects HMV's interim management statement to show a 1 per cent slide in first quarter like-for-like sales, which breaks down to a 2 per cent rise in the UK and Ireland business, a 9 per cent slide in the international division and a 3 per cent decline at Waterstone's. "We expect HMV UK to continue to benefit from the capacity withdrawal post-Christmas last year, while HMV international continues to suffer in weak markets and Waterstone's sales trends are held back in a weak book market," the broker said.
Nomura also highlighted the weakness in the international business, saying: "Macro data in Canada, as well as Asian markets in Hong Kong and Singapore suggest that international like-for-likes remains under pressure, similar to the -9 per cent run rate in the fourth quarter. A tough first quarter comparative in Canada, combined with a weak run rate in the fourth quarter suggests international like-for-likes could be down significantly more than our full year assumption of -2.6 per cent."
KBC Peel Hunt is looking forward to news of a 38 per cent hike in pre-tax profits when McBride posts full year results. The profits are expected to rise to £29.5m, while earnings per share are expected to rise by 34 per cent or 11.8p. "McBride is firmly on the recovery path, with improving sales, margins and cash flow," the broker said, adding that at current levels, "the shares continue to look good value".
Also on Thursday, Numis anticipates £202m in revenues, with £19.3m in earnings before interest and tax, when Premier Farnell issues interim results. "Following a re-rating of the share price the key to sustaining this level lies with the performance of the US business, where margins remain under pressure, and the outlook, where talk of stability in the rate of year on year declines in the first quarter will be under scrutiny for the performance into the second quarter," the broker said.
Results/updates: Playtech, Go-Ahead, Premier Farnell, McBride, HMV and Hays. Others: British Airways August traffic statistics.
Friday: Results/updates: Easyjet passenger statistics.