The Week Ahead: M&S unlikely to shine through the retail gloom

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There has been no shortage of bad news in recent weeks for the retail sector and expectations are low that Marks & Spencer will be able to buck the trend with its interim management statement on Wednesday.

One of those warning of further gloom is MF Global, with the broker – which describes the high street institution as having "a history of boom and bust" – saying that "after a strong 2010 and [first-half of this year] outturn, we fear the rising costs of 3 per cent space growth, operating costs of 4 per cent [and] falling like-for-like sales will lead to downgrades."

Société Générale points to John Lewis' recent figures as a sign that it will have been "a painful quarter for M&S in general merchandise" and the broker predicts a slowdown in like-for-like sales of just over 7 per cent.

Nonetheless its analysts are more positive on the food retail business, saying that "trends appear to have remained firm during the quarter", and it predicts a rise of 1.5 per cent in its like-for-like sales.

They also point out that the group's "trends retain the ability to surprise the market", saying that its "customers have in the past reacted more quickly to downturns and upturns in the economy than the average consumer."


Results/Updates: None.


EnQuest may be reporting its results for the year on Tuesday, but most of the attention is likely to be on its comments regarding the Government's recently announced plans to raise the tax rate for groups operating in the North Sea. The move, announced in last month's Budget, caused the oil and gas group to drop over 12 per cent in just one session, and it has barely moved from that level since.

Yet Numis Securities' Sanjeev Bahl is fairly reassuring on the tax hike and believes that the small and mid-cap groups "can defer and minimise the impact of the announced change through continued investment".

He therefore expects EnQuest "to confirm that it is not due to pay cash tax until at least 2012".

Results/Updates: EnQuest and IAG.


With Robert Walters updating the market on Wednesday before Hays does the same on Thursday, Shore Capital's David O'Brien is expecting both recruiters to discuss the effects of the tragedy in Japan. The analyst believes that Robert Walters will be the worst hit, estimating that it could cost the group around £1m in profitability, although it says that for Hays it will not be as bad as the recent flooding in Australia.

"We think the result of the disruption to [the groups'] Japanese businesses (and the knock-on effect of Japanese banks and corporations deferring hiring globally) will be to defer upgrades until the autumn," said Mr O'Brien. "[This] could potentially have a significant impact on sentiment in view of the high ratings."

Wednesday also sees the release of Misys' interim management statement for the third quarter, just over a month since the software company completed its acquisition of Sophis. UBS feels there could be "near-term execution risks" as a result, and adds that its other recent acquisition of a US payments engine from GCL has "strengthened Misys' offerings in the important North American market".

In terms of the figures, the broker is expecting its sales to see a like-for-like growth of around 2 per cent, with its treasury and capital markets sector coming in at £47m and its banking business contributing £34m.

Results/Updates: EasyJet, Marks & Spencer, Misys and Robert Walters.


Halfords releases a pre-close trading update on Thursday, and ShoreCapital's Ramona Tipnis expects the retailer's figures to disappoint, carrying on from its release at the start of the year. Predicting that its "retail division, which accounts for around 90 per cent of revenues, will continue to be under pressure", the analyst notes that "there are no catalysts to drive revenues at either [its] car enhancement or leisure segments which were weak during the third-quarter".

Results/Updates: Halford, Hays and Victrex.


With the saga of its proposed purchase of up to 51 per cent of Cairn Energy's Cairn India unit still ongoing, investors will be hoping for more news from Vedanta Resources on the attempts to get the Indian government to approve the deal when it updates the market on Friday. Unfortunately for them, however, The Share Centre's Graham Spooner fears the group will not be able to shed much light on the matter, predicting it will fail to move away from the main focus of its fourth-quarter production results.

Results/Updates: Vedanta Resources.


Construction PMI.


Services PMI; US FOMC minutes; US ISM non-manufacturing index.


BRC shop price index; Industrial production; Manufacturing output; NIESR GDP estimate; US crude oil


Bank of England asset purchasetarget; BoE Monetary Policy Committee interest rateannouncement; European Central Bank interest rate announcement;US consumer credit; US unemployment data.