The Week Ahead: Grim figures expected from Home Retail
Monday 12 January 2009
City analysts are predicting further sharp falls in like-for-like sales at Argos and Homebase when their parent company Home Retail Group posts its interim management statement this Thursday.
UBS anticipates a 10 per cent slump at Homebase, while Argos is forecast to report a 9 per decline for the 18 weeks to the beginning of January.
"Although one would normally expect December to be stronger as gift giving should be less exposed, the level of competitive activity (such as the Woolworths clearance) may have offset this," the broker said, adding the outlook statement is likely to be "generally downbeat on [consumer] demand prospects and on potential margin pressure from sterling devaluation".
Citigroup is equally bearish about Homebase, but expects a marginally better performance at Argos, forecasting an 8 per cent drop in like-for-like sales. "Despite a strong cash position and best-in-class management, a combination of volatile declining like-for-like sales and gross margin risk limits our enthusiasm for the shares," Citi said.
Today: Results/updates: No major companies due to report.
Tomorrow: All eyes on Tesco, due to report its Christmas trading figures. City analysts warn that, while rivals such as Sainsbury's and Morrisons have reported robust trading over the festive season, Tesco's numbers may disappoint, at least in a historical context.
JP Morgan anticipates news of robust trading from Premier Foods, the food producer, which is due to publish an update.
"The tone regarding sales trends in the second half of 2008 will presumably be positive, given reported growth for the 17 weeks [to the end of October] and our reading of the latest Nielsen data, which points to acceleration ..." the broker said.
Results/updates: Northern Foods, SIG, Game, Tesco, Premier Foods.
Wednesday: UBS recommends selling Man's shares ahead of the London-based hedge fund group's third-quarter statement. Expressing concerns about the pace of redemptions following the allegations against Bernard Madoff and the risk of further deleveraging from Man's structured products, the broker estimates $55.6bn (£36.5bn) in assets under management at the end of 2008. UBS said this would be 18 per cent lower than at the end of September, "when assets under management were at $67.6bn".
Firstgroup is due to post a third-quarter update. Given recent market concerns and commentary from peers about the slowdown in commuter travel, the focus is expected to fall on the trading in its UK rail business.
Results/updates: Redrow, Interserve, Punch Taverns, Charlemagne capital, Filtrona, Amec, Balfour Beatty, Firstgroup, Man.
Thursday: No surprises are expected when Carphone Warehouse posts its third-quarter update.
JP Morgan, which moved the company's stock to "overweight" after the first-half earnings report, said assuming trading and the outlook have not deteriorated further Carphone remains well placed to exit the current downturn in good shape.
"We have already modelled a material slowdown in connections for the next 18 months, and look for flat connections in the December quarter (pre-paid down 8 per cent, with 14 per cent growth in contract, driven by USB modems and the iPhone).
"Consensus appears more bullish on prepaid, more conservative on contract [connections]," the broker said, adding that as far as the TalkTalk division was concerned, the slowdown in the broadband market has been well flagged.
HMV is due to issue its Christmas trading statement with some analysts decidedly positive ahead of the update.
Citigroup, which expects like-for-like sales to have eased by 3 per cent over the 10-week period to the beginning of January, said that although weakening demand in UK entertainment is likely to weigh on the company's earnings forecasts and the share price, problems at Woolworths and Zavvi should provide the business with a significant revenue enhancement opportunity.
Results/updates: SABMiller, Associated British Foods, Experian, Ashmore, William Hill, Halfords, DSG International, Barratt, Galiform, HMV, Carphone Warehouse, Home Retail Group.
Friday: Little news is expected from Bellway's trading statement, given that the housebuilder last updated the market at the beginning of December.
Results/updates: Smiths News, Bellway. Other: John Lewis weekly sales data.
Monday: No major economic news expected
Tuesday: UK BRC retail sales
Wednesday: US business inventories, MBA mortgage applications, retail sales (less autos)
Thursday: EU European Central Bank interest rate decision. US initial jobless claims, Philadelphia Fed index, producer price index
Friday: US capacity utilisation, consumer price index, industrial production, Univ of Michigan consumer confidence survey
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