The Week Ahead: Unseasonal weather takes toll on high street stores
While the recent Indian summer is beginning to seem like a distant memory, the retailers are just starting to count the cost. The surprisingly high temperatures caught the high street unaware, with shoppers not too keen on stocking up their winter wardrobe with scarves and woolly jumpers. Therefore, investors will be holding their breath when Next unveils its third-quarter update on Wednesday, coming as it does ahead of figures from a number of its peers in the world of clothing retail.
Liberum Capital's Simon Irwin believes that the "timing could not possibly [have been] worse" for the unseasonal weather given "weakening consumer confidence, peaking input prices and high levels of inventory". He warns that sales across the sector may have been hit by as much as 10 per cent, adding that there "are clear signs ... promotional activity is starting to increase".
From Next specifically, Mr Irwin expects "another weak performance" from its stores. He is predicting a 4 per cent drop in like-for-like sales and forecasts that growth at its Directory division – which sells both online and by mail order – will have slowed. Although the analyst admits that the risk taken by the company in buying its stock earlier paid off over the first half of the year, he warns that there is "little guarantee of future success".
Deutsche Bank's Charlie Muir-Sands also believes Next's sales figures will have been hit by the weather, and is even more bearish on its like-for-like sales figures, expecting a drop of 6.5 per cent from its retail operations.
However, he believes that, with both sides of the business, a "proportion of these ... sales has been deferred into the fourth-quarter rather than lost", adding that the Directory unit will continued to have grown overseas.
Although he warns that the bank's figures for the third-quarter "will not be pretty", Evolution Securities' Ian Gordon still expects Barclays to "remain solidly profitable" when it updates the market today, with Barcap outperforming its rivals. Nonetheless, he predicts that the investment banking division will reveal a 16 per cent drop in revenues from the previous three months, with most of the damage done by its fixed-income, currency and commodities operations.
Results/Updates: Barclays, Capital Shopping Centres, Centamin Egypt and Mondi.
Results/Updates: Aegis, Imperial Tob- acco, Legal & General, National Express and Rathbones.
The recent market slump was a particular blow for BT, with the telecoms giant's huge pension fund deficit increasing as equities fell. With the rally coming after the end of the company's second quarter, Citigroup's Simon Weeden believes its figures for the period, posted on Wednesday, will show a £1bn worsening in its deficit. The analyst also says BT could unveil an increase in its interim dividend of more than 8 per cent to 2.6p, although he adds that he "will not be overly concerned if BT holds back at this stage given the recently volatile markets".
This volatility will be in focus for Standard Life as well, with the insurer unveiling numbers for the third-quarter including assets under management and new business sales. JP Morgan Cazenove is expecting its individual pension operations to see a mere 5 per cent growth because of a drop in inflows, while the broker predicts the group's assets under administration will have fallen 6.5 per cent from the previous quarter to £187bn.
Results/Updates: Antofagasta, Henderson, Inmarsat, Logica, Next, Randgold Resources, Standard Life and St James's Place.
After the pubs group JD Wetherspoon saw a 0.4 per cent jump in its like-for-like sales over August, analysts at Espirito Santo say that since trading over that month will have been hit by the riots around the country, both September and October should have enjoyed a slight improvement.
For the first quarter overall – which the company announces its update for on Thursday – analysts from the broker believe its sales will have risen by around 1.4 per cent year on year, a small slowdown from the previous three months.
Results/Updates: Aviva, BT, Cable & Wireless Communications, Invensys, JD Wetherspoon, Man Group, Old Mutual, RSA Insurance, Shanks, Spirent, Tate & Lyle and Unilever.
Results/Updates: EasyJet, Lancashire Holdings, Meggitt, Millennium & Copthorne Hotels, Royal Bank of Scotland, Smith & Nephew and Spirax & Sarco.
TODAY Bank of England lending figures; BSA savings and mortgage lending figures; eurozone CPI inflation estimate; eurozone unemployment rate; Hometrack house prices
TOMORROW Cips manufacturing PMI; eurozone manufacturing PMI; Preliminary third-quarter GDP figures; Service sector data; US construction spending; ISM manufacturing
WEDNESDAY Cips construction PMI; US ADP employment change; US interest rate decision
THURSDAY Cips services PMI; ECB rate decision; eurozone services PMI; US factory orders
FRIDAY Eurozone PPI; PPI data; US non-farm payrolls; US jobs data
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