In a quiet week for results, the retail sector will once again be in focus with Home Retail Group announcing its interim management statement on Thursday. After a warning last week from its blue-chip peer Kingfisher that the rest of the year looks likely to be tough for the UK retailers, there is plenty of caution ahead of its first-quarter figures, although its Homebase subsidiary is expected to follow B&Q and reveal that it has enjoyed a positive start to 2011 thanks to thesunny weather and numerous bank holidays.
Arden Partner's Nick Bubb believes the DIY chain will have seen its like-for-like sales rise between 1 and 2 per cent, although the analyst does point out that it represents only a small part of the company. He says Argos, however, has "big structural problems" and predicts its sales could drop by as much as 6 per cent, with furniture and electricals particularly struggling.
Numis Securities' Andrew Wade, meanwhile, feels Argos will see animprovement in its like-for-like sales trend, but is more cautious on its cost efficiencies than the group. He expects its full-year profit before tax to come in at £217m and says that – despite Home Retail's poor share price performance – there are better stocks to choose in the sector.
Synergy Health releases its full-year results on Tuesday, and analysts are not expecting many shocks. The healthcare outsourcer, which specialises in sterilisation services, last updated the market in April – alongside itsannouncement that it had bought the US group BeamOne for an initial sum of $35m – when it said in a brief statement it was on track to meet expectations. Its house broker, Investec, isestimating that its profit before tax will be close to £38m, an increase ofmore than 15 per cent, while it also points out that its earnings per share prediction of 51.6p is marginally below the general consensus of 52p.
In terms of the outlook, investors will be focused on its contract wins as well as comments on the situation in the UK, particularly about the NHS which is under pressure to cut costs. The company also looks as if it could have the ability to make more acquisitions, so the market will be looking closely for any news on this front.
Results/Updates: Phoenix IT and Synergy Health.
With its interim management statement set to be announced on Wednesday, Punch Taverns is another company expected to have received a boost from the recent good weather. Numis Securities' Douglas Jack says that the recent sun – alongside other factors, including increased investment in its food offerings – means that the strong earnings trend seen in the first half of the year should continue into the third quarter.
The company is currently in the process of splitting off its managed Spirit unit to tackle its debt, so an update will be expected on how thedemerger is going. Mr Jack notes that it is highly likely Punch's 12-monthresults will never be published: the analyst says the move could be completed before the end of its financial year in August.
Results/Updates: Punch Taverns and SThree.
PZ Cussons issues its trading update on Thursday ahead of next month's full-year results, with input costs likely to be a major focus. The soapmaker has suffered for a while now from the rising price of commodities, especially palm oil, and the management does not expect any significant relief through the next financial year.
While its take on the economic situation in the UK will be interesting,investors will also be hoping for anupdate on the business in Nigeria, where the group has been hit by the unrest following the recent election. However, the situation has calmed down in the country and there is optimism over PZ Cussons' potential there for the next financial year.
Also in the news will be Halfords as the bicycle and car accessoriesretailer issues its preliminary results. At the beginning of April the grouprevealed a profit warning, and that negative update prompted Peel Hunt's John Stevenson to reduce his profit before tax forecast by £3m to £124.7m, towards the bottom end of management's expectations. The analyst points out now that the group needs to rebuildinvestors' confidence following the disappointment in the spring, but says that if it can do this "and deliver a stable trading performance ... the shares will find support".
Results/Updates: Halfords, Home Retail, IG Group and PZ Cussons.
Results/Updates: Fuller, Smith & Turner.
Eurozone Sentix investor confidence index.
British Retail Consortium retail sales monitor.
BRC shop price index; US Federal Reserve Beige Book.
Bank of England interest rate and quantitative easing decision; trade balance; US trade balance; US unemployment claims.
Consumer inflation expectations; manufacturing and industrial production data; NIESR GDP estimate; PPI data; US import price index.