The Week Ahead: Falling inflation to dent Morrisons' sales

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The Independent Online

Morrisons is set to become the latest big grocer to post a slowdown in underlying sales resulting from falling inflation on Thursday. Morrisons is expected to unveil consensus underlying sales, excluding fuel and VAT, up by 4.5 per cent for the 13 weeks to 2 November, down from 7.8 per cent in the first half.

Matthew Taylor, an analyst at UBS, said: "The trading performance continues to be boosted by new customers, especially in the ex-Safeway stores, the appeal of its 'Fresh Value' offer and targeted promotions." Last week, Asda and Sainsbury's blamed falling price inflation for a slowdown in their recent sales growth.

Morrisons – which has enjoyed strong sales since chief executive Marc Bolland took the helm in September 2006 – is likely to post total sales growth above 8 per cent. Of this, UBS said that new store space would contribute about 4 per cent.



TODAY: Steve Lewis, chief executive of Majestic Wine, is expected to provide an update on how its news sales model is progressing, alongside its interim results for the half-year to 28 September. In September, the wine warehouse chain reduced its minimum purchase of wine bottles to six, from its historic policy of 12. Analysts will also scrutinise any remarks by Mr Lewis about the outlook for Christmas, a crucial trading period for Majestic's 150 stores in the UK. Nick Coulter, the analyst at Numis, expects Majestic to report first-half pre-tax profits of £5.6m. He forecasts that the retailer's underlying sales may have risen by between 2 per cent and 3 per cent.

Results/updates: Diploma, Lonmin, Asos, Cranswick, Majestic Wine, Robert Wiseman Dairies, UBC Media, Workspace, Interserve, Amlin, moneysupermarket.com, Persimmon.



TOMORROW: When easyJet last updated the market in July, the low-cost airline warned that trading conditions remained uncertain and that it expected to deliver full-year underlying pre-tax profits in the range of £25m to £50m. Analysts at Numis expect easyJet to unveil annual profits towards the top end of this range, at £47.4m, after an "encouraging" final quarter. It says that passenger numbers increased by 3.7 per cent and the load factor was up by almost 1 per cent in Q4. While Numis is trimming its forecast for easyJet's 2010 financial year from £197.8m to £179.6m as a result of the recent spike in fuel prices, it has raised its target share price from 320p to 384p.

Results/updates: Care UK, easyJet, Enterprise Inns, Big Yellow Group, British Land, Burberry, ICAP, Oxford Instrument, Record, VT Group, Avis Europe, Chime, Informa, Mecom, Vitec, Wellstream, Smiths Group.



WEDNESDAY: The City will be looking for further guidance on current sales growth trends when Experian, the data specialist, unveils its interims. Jaime Brandwood, the UBS analyst, said: "We don't expect a more bullish tone at this stage." In October, Experian said its total sales for the six months to 30 September were down by 6 per cent, although at an organic level this was just 1 per cent. Mr Brandwood said that last month Experian's management "sounded reasonably optimistic" about delivering a further slight margin improvement, year-on-year, and expects earnings before interest, tax and amortisation to be up by 40 basis points to 23.2 per cent.

Results/updates: Dimension Data, Experian, Mothercare, Rensburg Sheppards, UK Mail, New World Resources, Barratt Developments, Bovis Homes, Close Brothers, Hill & Smith, The Restaurant Group, UTV Media, Wolseley, Catlin.



THURSDAY: National Grid, the energy giant, is expected to post interim results in line with expectations. In a recent trading statement, NG said that its profitability is set to improve "substantially" in electricity distribution and generation and that it had maintained good momentum in its transmission operation. Analysts at Charles Stanley said: "We expect NG to reiterate its commitment to a policy of raising the dividend by 8 per cent in the year to March 2012."

Results/updates: Renewable Energy Generation, AEA Technology, Halfords, Investec, National Grid, Paypoint, Pennon, Scapa, Young & Co's Brewery, Aegis, Centaur, Chaucer, Chesnara, Hansard Global, Morgan Crucible, Morrisons, Omega, Premier Oil, United Group, Ricardo, Town Centre Securities.



FRIDAY: Results/ updates: Fuller Smith & Turner, Rotork.

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