The Week Ahead: Sainsbury's likely to be festive season's winner
While it is the high street stores that have grabbed the attention concerning the problems facing the retail sector, the supermarkets are by no means escaping unscathed. Of the three Footsie names, the last to release figures was Tesco, and it was not good news. With shoppers cutting back on their spending, the UK's largest supermarket admitted that for the fourth quarter in a row its underlying sales had dropped, while industry figures have shown it is losing market share.
On Thursday it announces a trading update which will cover the past six weeks. Nomura's Nick Coulter believes that if you take last year's VAT rise out of the picture, its like-for-like sales for the festive period will have fallen again, despite snow having hampered shoppers 12 months previously.
The analyst is more positive on Sainsbury's third-quarter statement, expected a day earlier, claiming it will have been boosted by "its traditional strength in events and Christmas" thanks to being the most premium offering of the "mass market players". JP Morgan agrees, with its scribblers proclaiming that the company will "undoubtedly be the winner over Christmas" and reveal a jump in like-for-like sales of 1.8 per cent.
They are less cheery over Morrisons' festive update, out today, predicting a 0.6 per cent rise, which would represent a major slowdown from the 2.4 per cent increase during the previous three months. Mr Coulter is still a fan of the group, as he believes initiatives such as its new "fresh market" stores will help it to remain the supermarket "with the most earnings surety".
Results/Updates: HMV, Morrisons and Persimmon.
It's the battle of the department stores on Tuesday, as Marks & Spencer and Debenhams go head-to-head. In November M&S revealed that underlying sales for the second quarter had dropped for the first time in two years, but UBS believes that over the following three months it will have seen a 1 per cent like-for-like rise in general merchandise sales and a 2 per cent increase in food. However, the broker's analysts are worried about the high street institution's margins, thanks to the discounts being offered by it and its peers.
They feel Debenhams, meanwhile, will reveal that sales have dropped 1 per cent, with it – along with the rest of the clothes retailers – being hit by the unseasonably mild weather enjoyed in the autumn. One factor that could help its numbers, say the analysts, is its decision to be the one of the first on the high street to start its sales, although they also point out that, as with M&S, this is likely to come with a blow to margins.
Results/Updates: Balfour Beatty, Debenhams, Dunelm, Interserve, Marks & Spencer, Rathbones, Restaurant Group and Smiths News.
Updates from both Hays and Michael Page mark the conclusion of a run of results from the recruiters which has left the sector down in the dumps. The latter has only itself to blame for the gloomy mood, having released a profits warning at the start of December, so investors already know that Michael Page's full-year profits will be close to the bottom of market forecasts, although they will be hoping that no more nasty surprises are on the way.
Hays' second-quarter trading update is also expected to show the issues facing the recruitment groups, as the economic crisis dampens companies' enthusiasm for hiring. Still, Peel Hunt feels that many of the fears are already in the price, and says the group's exposure to the Australian mining and resources sector, as well as Germany generally, "should give some support that [its] listed peers do not have".
Results/Updates: Game, Greggs, Hays, Michael Page, N Brown, Sainsbury's and Supergroup.
Results/Updates: Ashmore, Barratt Developments, Booker, Computacentre, Halfords, Home Retail, JD Sports, Mothercare, SIG, Thorntons and Tesco.
The week comes an end with a trading update from Spectris ahead of its full-year results next month. When it last reported figures, in November, the electrical engineer was seeing a sharp increase in like-for-like sales, and Numis Securities' Scott Cagehin is preparing for yet more good news. The analyst is expecting revenue growth to be in the double digits, thanks to both organic improvements and recent acquisitions. However, he warns that growth will soon start to return to more normal levels as year-on-year comparisons becoming tougher, although he still believes its valuation is "undemanding".
Results/Updates: Bellway and Spectris.
TODAY Eurozone Sentix investor confidence.
TOMORROW BRC retail sales monitor; RICS house price balance.
WEDNESDAY BRC shop price index; Trade balance; US Beige Book;US crude oil inventories.
THURSDAY Asset purchase facility; European Central Bank conference; Eurozone industrial production; Industrial production; Manufacturing production; Monetary Policy Committee interest rate decision; NIESR GDP estimate; US business inventories; US Federal budget balance; US retail sales; US unemployment claims.
FRIDAY PPI data; US import prices; US University of Michigan consumer sentiment; US trade balance.
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