The Week Ahead: Majestic Wine should bring cheer to retailers

Economics Diary

Majestic Wine is tipped by brokers to provide some light relief for the retail sector when it unveils its annual results today. The consensus in the City is that Majestic will deliver a 21 per cent jump in pre-tax profits to £13m and that its shareholders can also look forward to a substantial increase in dividends. Some predict a payout of up to 5.8p per share, which would represent a 40 per cent increase on the year.

Majestic Wine is tipped by brokers to provide some light relief for the retail sector when it unveils its annual results today. The consensus in the City is that Majestic will deliver a 21 per cent jump in pre-tax profits to £13m and that its shareholders can also look forward to a substantial increase in dividends. Some predict a payout of up to 5.8p per share, which would represent a 40 per cent increase on the year.

Majestic's outlook statement should also be relatively upbeat. Although the company may have been slightly held back by the poor weather so far this summer, it should have no problem building on its trend of strong sales growth.

Majestic Wine is without doubt a cash cow. Its balance sheet will boast £11m of cash at the year end, meaning that shareholders can look forward to dividend growth and possibly a share buyback in the years ahead.

TODAY: These are difficult times for Renold. The engineer is sensitive to fluctuations in exchange rates and to raw material prices. Last month, the group parted company with its finance director, Steve Mole, which does not bode well for today's full year figures.

Back in April, the com pany issued a profit warning and now the group is expected to deliver a slump in profits for the year.

UBS is forecasting pre-tax profits at the group to collapse to just £1.7m, down from £5.4m in 2004.

Analysts at the Swiss broker worry that Renold lacks pricing power and that it has been unable to pass on to its customers increases in raw material values. UBS also believes that it has been negatively affected by the ongoing difficulties in the North American automotive sector.

Results: Full year - Carclo; ILX Group; Majestic Wine; PayPoint; Renold; Ten Alps; Workspace Group. Interims - None.

TOMORROW: The washroom services group PHS recently confirmed a takeover approach and any update from the company with regard to how negotiations are going will certainly be gladly received by investors.

A number of private equity firms are said to be interested in the company including JP Morgan, BC Partners and the US-based Clayton Dubilier & Rice. As for PHS's full-year numbers, nothing particularly exciting is likely to emerge. Profits should rise to around £48m from £43.5m last time.

Is the consumer slowdown in the UK causing people to shun foreign trips in favour of Britain's beaches? That must be a worry for executives at First Choice. As is a growing trend among consumers to skip traditional package holidays in favour of do-it-yourself alternatives, which can be booked online. These see holidaymakers organising their own flights, transfers and accommodation via one of the many websites available these days.

First Choice always makes a loss for the first half of the year. This time around it should come in at around £39m, little changed on last year.

Also a worry is April's news that the company had 40 per cent of its inventory unsold. Given the recent strong gains by First Choice shares, Williams de Broë warns that the stock could take a tumble should the results disappoint the market in any way.

Helphire's annual figures are unlikely to disappoint. The company lends cars to people who have had theirs damaged in an accident and it should unveil a near doubling in profits to around £14m. Analysts will be keen to hear how Help-hire's Albany acquisition is bedding down.

Meanwhile, some in the Square Mile believe the company could be a takeover target, given Aviva's comments following its purchase of RAC earlier this year. At the time of the deal, Aviva declared its intention to "help our customers learn how to drive it, buy it, insure it, and, if things go wrong, get them back on the road fast".

Results: Full year - CML Microsystems; Goldshield; PHS Group; Radstone Technology; Warner Estates; Helphire. Interims - First Choice; Future.

WEDNESDAY: Investors can expect strong results from Itis Holdings. Not so long ago the traffic information company said that its full-year results would beat expectations. For the first half of the year Itis revealed a £1.6m loss, but it is forecast to have traded profitably since then.

Dutch rival TomTom recently floated on the Amsterdam Stock Exchange and notched up a €1.9bn (£1.07bn) valuation. This helped attract more attention to the satellite navigation market, in which Itis is becoming an increasingly big player.

Itis shares have gained 15 per cent in the past month but Altium Capital believes the company's valuation still does not reflect its growth potential.

Results: Full year - Itis Holdings. Interims - Civica.

THURSDAY: Results: Full year - Wyndeham Press; TRL Electronics. Interims - None.

FRIDAY: Results: None expected.

TODAY: UK - producer price inflation (May); ODPM house price survey (Apr). Japan - GDP (final) Q1; industrial production (final) Apr.

TOMORROW: UK - RICS house price survey (May); inflation (May); France - inflation (May); Italy - industrial production (Apr); US - producer price inflation (May); retail sales (May).

WEDNESDAY: UK - unemployment (May); average earnings (Apr); speech by MPC member Charlie Bean. Japan - monetary policy decision. Opec - extraordinary meeting. US - inflation (May); business inventories (Apr); Empire State manufacturing survey (Jun); net portfolio investment flows (Apr); industrial production (May); Federal Reserve Beige Book.

THURSDAY: UK - retail sales (May). EU Council Summit (day 1 of 2). Eurozone - inflation (May). ECB - 'non-rate' meeting. US - weekly jobless; housing starts (May); Philadelphia Fed survey (Jun).

FRIDAY: Eurozone - industrial production (Apr). US - current account (Q1); Michigan consumer sentiment survey (prel) Jun.