Week Ahead: Retail outlook provides challenge for Kingfisher

The DIY giant Kingfisher is clear in its ambition to become the global leader in the home improvement sector, and with the company – whose stores include B&Q in Britain and Brico Dépôt in Europe – recently speaking about lifting the tempo of its expansion, investors will be eager to hear more about its plans when it releases its third-quarter update on Thursday.

Investec, however, is more concerned about the outlook for the general retailers sector, which it says could "potentially face a nasty combination of external macroeconomic pressures and internal structural challenges in 2011".

As a result, it believes Kingfisher is "flying into a stronger headwind" and has a "sell" recommendation on the company. The broker is forecasting third-quarter retail profits of £255m, together with growth of 12 per cent, down from nearly 16 per cent in the first half of the year.

"The macroeconomic backdrop remains weak, therefore the longevity and success of Kingfisher's self-help measures remains important," it said, referring to the company's recent cost-cutting measures that have included a number of store closures in China.

Singer Capital Markets points out that B&Q reported a 3.7 per cent fall in like-for-like sales as part of its first-half update, largely because of the introduction of Kingfisher's TradePoint business. The unit, which is aimed at the trade market and can now be found in a number of B&Q stores, should start to "contribute positively" to the company, according to the broker, and could produce "a swing factor of almost 3 per cent".

Today

Results/Updates: Phoenix IT Group.

Tomorrow

The exhibitions company ITE releases its preliminary results for the year tomorrow, and analysts are mainly expecting good things. Numis Securities notes that it has been reporting a solid upturn in trading conditions recently, with the broker praising exhibitions as "structurally robust".

In terms of the future for the company, Numis says it sees "clear scope for upgrades ... both on fundamentals and as the group continues to make bolt-on acquisitions", and adds that it is "excited by the potential to apply new technology and social media to the exhibition industry".

Investec Securities is similarly positive, with its analyst Steve Liechti keeping a "buy" recommendation on the stock, saying the company "looks well placed given buoyant Russia growth".

Also releasing results tomorrow is Aberdeen Asset Management, and Singer Capital Markets forecasts "strong finals" from the fund manager. "Investment performance has continued to improve and we expect strong equity flows to have continued since year-end leading to a strong outlook statement and potential for consensus upgrades," the broker said.

Results/Updates: Aberdeen Asset Management; Findel; Halma; Holidaybreak; ITE; Northumbrian Water; RPC; Shaftesbury; Topps; VP.

Wednesday

Results/Updates: Anite; Brewin Dolphin Holdings; Sage Group; Thomas Cook.

Thursday

More than six months since it spent €237m on the French company Fruite Enterprises, Britvic – which releases its full-year numbers on Thursday – is eager to make more deals in the European market, according to Nomura.

The broker says the "robust story" of the soft drinks company, both in this country and across the Channel, is set to continue, although it concedes that "Ireland presents some challenges". Nonetheless, Nomura's analysts keep a "buy" recommendation on the maker of Tango, Fruit Shoot and Robinsons, citing its attractive valuation and advising investors to "buy on weakness".

Results/Updates: Britvic; Kingfisher; Marston's; Tui Travel.

Friday

The pub group Greene King releases its interim results on Friday, and Goldman Sachs is expecting the retail numbers to "impress". The broker believes the company, whose range of beers includes Abbot Ale and Old Speckled Hen, should see an increase in profit margins year-on-year "for the first time since [the first-half of] 2006-07". Goldman's analysts also forecast that Greene King's strong balance sheet means it could continue the expansion of its pubs estate.

Execution Noble is also optimistic about Greene King's chances in a troubled sector, saying that it believes its "traditional pub offering leaves it as the best placed" pub company to benefit from an expected bounce in wet-led sales, as opposed to food-led sales, and reduced capacity in 2011.

Results/Updates: Berkeley; Greene King.