The Week Ahead: Tesco's new boss to be focus at full-year results
Monday 18 April 2011
As the new man in charge, Philip Clarke – who took over the reins from Sir Terry Leahy not much more than six weeks ago – will have all eyes on him tomorrow when Tesco announces its full-year results.
The figures from the UK's largest supermarket come in the wake of the latest survey from the British Retail Consortium last week, which, despite revealing that March saw the most dramatic drop in sales since the survey began over 15 years ago, was more positive for the supermarkets, with food sales dropping just 0.3 per cent year-on-year.
Nonetheless, Jefferies International still expects Tesco's international businesses to be the major source of strength, and it predicts that outside of the UK its earnings before interest and tax will increase over 20 per cent. In this country the broker's analysts expect its sales to have grown 8 per cent, contributing to a generally "solid" set of numbers.
In terms of Mr Clarke's maiden comments, they are expecting him to "flag some subtle changes in the leadership approach", including "a more critical view of the group's UK performance... and international laggards". Meanwhile, Credit Suisse believes his debut will "provide a fresh perspective on Tesco's growth" and that he will take "an open, consistent, and thorough approach to financial communication which should be well-received by investors".
The broker adds that the update provides a stage for "Tesco to counter some recent negatives and refocus investors on its multiple opportunities". It also feels that the group's new board "will oversee changes – in areas like non-food, premium fresh and marketing – that will mean some current concerns fade".
Results/Updates: Jupiter Asset Management.
Sentiment around Burberry has been damaged in recent weeks thanks to the devastating tragedy in Japan, but Royal Bank of Scotland still expects the luxury goods group to report tomorrow that trading in the second-half of the year has been "robust".
The broker feels its sales growth will have slowed slightly in the final three months, but predicts it will still see an increase in wholesale revenues – minus China – of around 15 per cent.
Its analysts expect, because of the timing, the Japanese tsunami and earthquake to have had little impact on the company's numbers for the financial year, but believe the upmarket retailer could discuss how it expects the current 12 months to be affected.
Results/Updates: Burberry, Hargreaves Lansdown, Reed Elsevier, SABMiller and Tesco.
Bunzl's interim management statement on Wednesday is the distribution group's first update since it was relegated to the FTSE 250 last month. Although Shore Capital notes that it is "seemingly unloved by many investors, being oft described as 'dull'", the broker's analyst, Robin Speakman, is still a fan, saying that instead of being boring it is "predictable – which we like". Mr Speakman is certainly not anticipating any major surprises, instead expecting the release "to confirm steady growth and cash generation", although he does add that there could possibly be "further news on the acquisition pipeline".
Reckitt Benckiser is also updating the market on Wednesday, after its shock announcement last week of the upcoming retirement of its long-serving chief executive Bart Becht. The immediate response of its share price was to drop over 7 per cent, so investors will be hoping for their fears to be eased by comments about the changeover to Mr Becht's successor, the consumer goods company's marketing chief Rakesh Kapoor.
Results/Updates: BHP Billiton, Bunzl, Charter International, Computacenter, DS Smith,Home Retail and Reckitt Benckiser.
Elementis reports its interim management statement for the first quarter on Thursday, and the chemicals group will hope the update prompts its share price to continue the rally that has seen it rise more than 50 per cent since November. Altium Securities' Iain Staples is positive, noting bullish investment elsewhere in the sector from its Dutch peer AkzoNobel and strong automobile-production data from China, and the analyst is expecting the company to experience "continuing robust and long-term demand ... for its key products".
Also releasing an update is Autonomy, and JP Morgan Cazenove says it will "be closely linked to the timing and revenue recognition" of the numerous large contracts announced over the first quarter.
Results/Updates: Anglo American, Autonoy, Elementis, Persimmon, Sports Direct and William Hill.
Rightmove house price index.
Markit Household Finance index.
EU current account data; preliminary mortgage approvals data; US building permits report; US housing starts.
Minutes of the last Bank of England Monetary Policy Committee meeting; Public sector net borrowing data; US existing home sales data.
Retail sales data'; US Philadelphia Federal Reserve survey; US unemployment data.
UK markets closed (Good Friday).
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