The Week Ahead: Debenhams to follow M&S's strong outlook
Monday 12 April 2010
Analysts expect little in the way of surprises when the high-street chain Debenhams issues half-yearly results this week.
The company posted a first-half trading update in the middle of March, pointing to "significantly higher" gross margins, with underlying earnings and pre-tax profits on track to exceed last year's figures and meet market forecasts. Panmure Gordon is looking for £113.8m in pre-tax profits, which is just below company guidance for £114m. Numis is slightly ahead with a forecast of £115m.
News on trading is likely to be positive, with Numis highlighting the upbeat statement from retail bellwether Marks & Spencer last week. As a meter, at the time of the March update, the analysts at Execution Noble said their quarterly clothing survey of 5,000 consumers had shown some strength in the Debenhams offer, "with the 'Designers at Debenhams' brands particularly popular", adding: "In December's survey Debenhams was regarded as better quality and having a broader range than Next."
That said, in medium term, the Debenhams consumer could be vulnerable to the fragility of the wider economy "if, as the market expects, unemployment rates increase once more", according to Panmure.
"We continue to prefer clothing retailers with stronger balance sheets... [such as] Next, or [those] which have more scope for step change... [such as] Marks & Spencer," the broker said. "We also like companies with high exposure to structural growth in online clothing retail, for example N Brown or ASOS. Finally, aspirational fashion brand Ted Baker has some interesting opportunities available to it in retail, wholesale and licensing and we are positive about its premium positioning in the clothing market."
Today Polling group YouGov will post half-yearly figures this morning, and given the brief pre-close statement at the beginning of February, trading is expected to be in line with hopes. "The pre-close update...gave no cause to adjust full-year expectations, but indicated that timing of business flows will mean stronger second-half than first-half revenues and profits," Fiona Orford-Williams, an analyst at Edison Investment Research, said at the time. "Industry comments are also [pointing to the fact] that trading conditions are starting a tentative recovery."
Numis is also hopeful, saying that its positive view on the company was driven by YouGov's structural strengths, among other supportive factors such as the strong brand and the balance sheet. Revenues should "recover strongly" as business confidence returns, the broker added, repeating its "buy" view on YouGov's stock last week.
Results/Updates: Vernalis, XP Power, Carr's Milling, and YouGov.
Tomorrow Results/Updates: Oxford Catalysts, Porvair, Treveria, and Debenhams.
Wednesday The engineering consultancy WS Atkins is likely to issue an upbeat trading statement midweek, with Numis expecting to hear "positive noises" about the company's ability to weather the "potential storm to come in the UK public sector". In terms of current performance, Atkins is likely to say that pre-tax profit expectations have been met, while there is scope for consensus earnings estimates to drift higher.
Turning to the stock, Numis said the valuation may be vulnerable to cuts and delays in public-sector spending. "The current yield of 4.3 per cent is a support although the shares are at the top end of their trading range," the broker said. "A positive catalyst to breaking the 550p/650p price range is the group making a strategic acquisition that dilutes its UK public-sector exposure before... 2011."
Results/Updates: Synergy Health, Alterian, JD Sports Fashion, AGI Therapeutics, Ashmore, and WS Atkins.
Thursday The Marks & Spencer update last Thursday boosted hopes ahead of the chilled-food producer UniUniq's full-year figures this week. FinnCap said news of M&S's sixth-consecutive quarter of like-for-like growth from food augured well for the likes of Uniq, which has a high exposure to the retail bellwether. Beyond the read across from M&S, this week's results also give investors a chance to "catch up after a year of major change", the broker added, pointing out that all of the company's European operations "have been divested or agreed to be sold".
Results/Updates: Hasgrove, PZ Cussons, Rio Tinto, Eaga, and Uniq. Other: BP's annual general meeting.
Friday Results/Updates: None.
Justin Bieber was one of the hardest hit
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Shock poll shows voters believe Ukip is to the left of the Tories
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Ukip candidate jokes about 'shooting peasants' in racist and homophobic rant
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
iJobs Money & Business
Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
£32000 - £35000 per annum + benefits: Ashdown Group: Marketing Services Manage...
£Neg. (DOE) + Excellent Benefits: Guru Careers: A Finance Account Manager with...