The Week Ahead: Investors braced for grim news from M&S

It is an important week for the retailers as they assess the damage after an "appalling" run-up to Christmas. None more so than Marks & Spencer, which some fear could warn on profits on Wednesday.

Ian MacDougall, an analyst at Blue Oar Securities, said: "A profit warning looks more likely than not and the dividend is by no means safe; if there is a major profit warning, maintaining the dividend would almost certainly not go down well, given the level of debt."

Marksies has held three "20 per cent off" days, which have been pretty popular and are expected to have cleared much of the stock lag, but is unlikely to have resolved all of its issues. Blue Oar forecasts an 8 per cent decline in like-for-like sales in the second half in both food and clothing. Others preparing to report include Next, J Sainsbury and Debenhams.

Next is expected to remain relatively resilient, with Blue Oar predicting the retail arm would be down only 6 per cent for the second half. Next Directory sales should be up by about 2 per cent.

The broker was not so confident about Debenhams and warned of long-term concerns over Sainsbury's strategy. "This will be the most depressing reporting season for years. Hardly any statements will show positive like-for-like growth and the whole season has been the severest test of retailers' budgeting, stock management and promotional skills that there has been in recent memory," Mr MacDougall said.

Today: Shares in Restaurant Group, which owns chains including Frankie & Benny's, gave up some ground on Friday as investors feared today's update. And with good reason, according to one analyst. While the company has been resilient, Paul Hickman of KBC Peel Hunt is not expecting any like-for-like growth because of demand weakness. Restaurant Group's budget chains should provide some protection, but given macro issues in the market Mr Hickman said he would consider downgrading assumptions for the full year.

David Montgomery's Mecom Group is also set to update the market today. It has been a tough year for media companies, so the prospects are not looking rosy. The group is worth about £12m, with debts of £587m, and just last week Mecom managed a two-month delay for a covenant test. Investors will be anticipating an update on the group's plan to sell its German newspaper arm among other assets that have attracted interest.

Trading updates: Mecom Group; Restaurant Group.

ToMORROW: The prospects at Dunelm, another retailer to report, are hardly being talked up. Blue Oar's Ian MacDougall said: "The homewares market is in pieces." He warned that there were no guarantees, "and like-for-like sales will certainly be substantially negative".

Trading updates: CRH; Debenhams; Dunelm Group. Next. Extraordinary General Meeting: Regen Therapeutics. Traffic Numbers: British Airways.

WEDNESDAY: As the economic downturn has intensified, punters are staying indoors and consoling themselves by eating pizza, lots of pizza, judging by Domino's stellar performance. Analysts at KBC said the branding is very strong "and should benefit from the impulse to stay at home". Performance was up 8.8 per cent in the third quarter, and KBC estimates a rise of up to 6 per cent in the last three months of the year.

Axis Shield, which makes medical diagnostic kits, will also report. The group signed a new deal with US giant Abbott Laboratories last month. The partnership will be to create a new test for Alzheimer's Disease.

Trading updates: Axis Shield; Caledonia Investments; Cape; Domino's Pizza; Marks & Spencer.

THURSDAY: Two UK-listed recruitment firms, Hays and Michael Page International, are due to report. Unfortunately, the sector is especially exposed to the pain in the macro environment, which is only likely to intensify. The worsening economic conditions and the outlook for jobs means activity, already down, "looks set to fall substantially over the next 12 months," Investec analyst Robert Morton says. The outlook has led Mr Morton to lower his forecast for Hays, with pre-tax profits now expected to come in £40m lower for the full year at £140m. The following year's estimates are down £75m to £105m.

Signet Jewelers reported a weak third quarter last month, in the wake of a poor performance in the US and the UK. The market isn't holding out much hope for them either.

Fourth quarter update: Michael Page International; Persimmon. Trading updates: Hays; J Sainsbury; Signet Jewelers; Ted Baker; Wellstream Holdings. Annual General Meeting: Topps Tiles.