The Week Ahead: M&S will give clues to mood on the high street

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The Independent Online

Marks & Spencer is set to dominate the headlines tomorrow, as investors scrutinise the retailer's full-year results for signs of stability on the beleaguered British high street.

Growing talk of "green shoots" has boosted the FTSE 350 general retail index by almost 42 per cent since the beginning of this year, while M&S has seen its share price advance more than 52 per cent in the same period.

Sales data has been pre-released, so investors are expected to focus on profits, the dividend, updates on strategy and management's thoughts on the road ahead.

As a meter, sell-side analysts expect the company to report annual pre-tax profits of £558m to £620m, with 25.7p to 30.9p in earnings per share. The consensus forecast is £603m, well below the £1bn-plus posted last year.

Charles Stanley, which expects the company to post a cautious outlook, said the dividend remains the key area of uncertainty, as it was held at the interim stage. "We think management will be very reluctant to cut the dividend, given the 23 per cent upward rebasing in 2008/09. It is possible, therefore, that the full-year dividend will be held, with management taking a 'wait and see' approach," the broker said. "Countering this would be the negative signal a maintained dividend would send to debt holders."



Today: MITIE, the facilities, property and engineering services group, is due to post full-year results, and, given the indications in the pre-close update, the numbers are likely to be in line with expectations.

Beyond the headline figures, Panmure Gordon, which forecasts £77m in pre-tax profits, compared to a consensus estimate of £78m, expects investors to focus in issues such as current contract opportunities, whether they come in the form of new agreements or extensions, and the stability of private-sector revenues.

Results/updates: Ark Therapeutics, Big Yellow, Robert Wiseman, MITIE.



Tomorrow: Deutsche Bank expects a strong set of preliminary results from SSL International, the maker of Durex condoms. "The company's trading update already revealed strong sales growth and reiterated guidance for operating profit growth in excess of 30 per cent," the broker said. "We hope SSL will use this opportunity to provide the market with an update on recent trading in Eastern Europe, following the announcement of further investment in the region last month."

Deutsche also weighed in on Victrex, the polymer manufacturer, which is due to post half-year results tomorrow. Given the softer volumes reported in the recent interim management statement, pre-tax profits are forecast to decline 47 per cent to £14.4m, with a 1050 basis points contraction in earnings margins. "We assume no recovery for the rest of 2009 with an average monthly volume for the rest of 2009 of 110 tonnes, giving a 45 per cent drop for the year," the broker said.

Results/updates: Burberry, Cairn Energy, Great Portland Estates, ICAP, Keller, Spectris, TUI Travel, Vodafone, Victrex, SSL International, Marks & Spencer.

Wednesday: Results/updates: Britvic, Care UK, De La Rue, Experian, Future, Mothercare, Yell.



Thursday: Numis expects £65m in pre-tax profits when Daily Mail & General Trust, the newspaper publisher, posts half-year results. Market trends are likely to be in line with those highlighted in the company's pre-close update in March, according to the broker, with the business-to-business division outperforming the consumer facing unit. "We were encouraged that in non-recruitment classified advertising the company noted 'some degree of stabilisation' although we expect overall advertising to remain volatile," Numis said, sticking to its "add" stance.

Also on Thursday, Evolution expects news of a small improvement in second-quarter trading when Mitchells & Butlers, the FTSE 250-listed pubs group, posts interim results. The debt position is also likely to be better, while market share is expected to rise "significantly", positioning the company to emerge stronger from the recession.

Results/updates: British Land, Cable & Wireless, Close Brothers, Scottish & Southern Energy, Mitchells & Butlers, Daily Mail & General Trust.



Friday: Marston's is due to post interim results, and Numis forecasts a 15 per cent decline in pre-tax profits. The broker nonetheless reckons that the share could rally, given the possibility of an improvement in trading, and relatively conservative assumptions in advance of the update.

Results/updates: British Airways, Chrysalis, Marston's.

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