The Week Ahead: Tesco's pre-Christmas surge trumps rivals

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The Independent Online

Tesco is expected to post a strong third-quarter update tomorrow, with the numbers expected to confirm the supermarket giant's strengths ahead of the peak Christmas trading period.

Analysts at Shore Capital anticipate a like-for-like sales growth of around 2.5 to 3 per cent in the UK. "With food inflation easing back, but with favourable comparatives, we believe Tesco's performance will be seen as steady by the market," the broker said, adding, in light of the lower inflation and the anniversary of the discount brands introduced last year, "volume performance should be sound", coming in "closer to and maybe ahead of some of its competitors".

Beyond the UK, the picture is likely to be "mixed", UBS believes. Though the figures are not likely to be reported, the broker said European sales are expected to have grown by 3 per cent in local currency terms. Turning to Asia, UBS said: "With markets remaining generally solid, we forecast a continued healthy trend, at +15 per cent at constant [exchange] rates."

Today: Results/Updates: Wichford.

Tomorrow: UBS expects to hear of a significant recovery in like-for-like sales when Game, the video-games retailer, issues an interim management statement. The broker said the success of recent launches such as Modern Warfare 2, Uncharted 2, Assassin's Creed 2 should help to offset the weakness in hardware sales. "Even though supermarkets and online retailers have been discounting heavily to gain market share in the new games categories, Game is expected to have retained its market share in key titles and continued to increase gross margin," UBS added in a preview published last week.

The wireless specialist Anite is due to issue interim results. Full-year forecasts are likely to remain changed, according to Numis, which said that the update on the pipeline for fourth-generation networks or LTE (long-term evolution), will be in focus. "We expect LTE to be a strong technology wave, so the key uncertainty for us is perhaps Anite's ability to take advantage of that wave," the broker said, pointing out that in 2006 and 2007 the company's handset-testing business alone made more profit than it forecasts "for the whole group in 2011".

Results/Updates: Southern Cross Healthcare, Domino Printing Sciences, Anite, Game and Tesco.

Wednesday: The software group Micro Focus International is due to issue interim results and, given the company only recently issued a comprehensive trading statement, Panmure Gordon expects the market to focus on issues such as organic growth and renewal rates. "We expect the market prognosis to be tough but in line with expectations," the broker said, adding: "We should hear more about the Borland and Compuware acquisitions [and] how they have been 'integrated rapidly'."

Results/Updates: Imagination Technologies, Photo Me International, Stagecoach, Standard Chartered, IG Group and Micro Focus International.

thursday: The electronic components distributor Premier Farnell is likely to speak of an improvement in the sales picture when it issues third-quarter results later this week. The pace of decline in sales per day is likely to have moderated, according to Deutsche Bank, which forecasts a 13.3 per cent fall, compared with 16.7 per cent in the second quarter. Elsewhere, UBS said that crucial within the results will be trends in Newark, the company's core US distribution business, which failed to impress in the second quarter.

The medical device manufacturer Consort Medical is due to issue half-year results. Given that the company confessed to a challenging start to the year in September, Numis expects Consort's Bespak inhaler systems division to undershoot its estimates. The group's King Systems anaesthetics products division, on the other hand, could surprise on the upside, the broker added.

Results/Updates: Eaga, Sports Direct International and DS Smith.

friday: UBS expects a 2 per cent decline in UK like-for-like sales when HMV issues interim results at the end of this week. HMV International is expected to report a 12.5 per cent decline, while Waterstone's is forecast to report a fall of 3.5 per cent. "We forecast no significant improvement from the first quarter as HMV gains shares across most categories against a declining market," the broker said, adding that Christmas trading appeared to be on track.