Belfast Telegraph

Holiday firms take centre stage

The impact of Britain's heatwave will be in sharp focus next week when Thomas Cook and TUI Travel report back from the holiday sector, while Irn Bru maker AG Barr and pub group Mitchells & Butlers update on drink sales in the summer sun.

Holiday giants Thomas Cook and First Choice owner TUI Travel will go head-to-head on Thursday when they update on summer trading.

Europe's biggest tour operator TUI saw UK summer sales growth ease slightly as July's heatwave hurt last-minute getaways, but is benefiting overall from growing consumer confidence.

Rival Thomas Cook will also provide more colour on trading during the final three months of its year to the end of September.

Boss Harriet Green recently shrugged off worries over Thomas Cook's summer trading, when she said it was too early to tell if the heatwave persuaded holidaymakers to stay in Britain rather than fly abroad.

However, Irish carriers Ryanair and Aer Lingus have both since warned over profits, hurt by factors including slumping demand over the summer.

But despite any short-term weather impact, both TUI and Thomas Cook are likely to focus on improved underlying trading.

Thomas Cook is expected to report more progress on its transformation, which Ms Green said has hauled the group "back from the brink".

Its shares have soared 11-fold over the past year, following a rescue deal with lenders, while it has halved its debt pile and announced plans to axe 2,500 jobs and close nearly 200 high street travel agencies under the turnaround.

And the firm will cite better planning which left it with fewer last-minute breaks to sell - down 9% on last year - meaning the group is no longer having to resort to cut-price offers to get rid of unsold holidays.

Analysts at Credit Suisse expect Thomas Cook's adjusted pre-tax profits, which strip out expensive restructuring, to soar to £105.3 million in the year to the end of September, from £12.7 million a year earlier.

TUI, which also owns brands including Thomson and Gulliver Travel, reported summer sales ahead of the market in August, with 84% of its summer programme sold.

UK sales were up 11%, boosted by a 4% increase in customer numbers and a 7% rise in prices, and it indicated an "encouraging" start to winter trading.

Boss Peter Long said consumer confidence is ''clearly looking much more positive''.

Analysts expect TUI to report underlying earnings of £546 million on a constant currency basis in the year to the end of September, up from £490 million a year earlier. And they see its revenues rising to £14.8 billion from £14.5 billion in 2012.

Analysts at Panmure Gordon said: "We believe trading into winter 2013/14 is likely to have been impacted by the recent warm weather and Egyptian unrest and therefore we expect some weakness in the current trading figures."

But they said its strong sales position in August will stand the firm in good stead, adding TUI provides solid growth and a decent dividend yield.

A surge in online sales is expected to have helped menswear retailer Moss Bros in its first half as it battled against falling demand for hire and tough high street conditions.

The group, which reports half-year results on Thursday, said year-on-year online sales soared 138% in the first 18 weeks of its financial year after it launched a new retail website in January and nationwide click and collect offering.

Its web success saw retail sales rise 2% in the period, offsetting a 6.2% slump in hire sales, with overall like-for-like trade up 0.3%.

The group is launching a transactional hire website later this month, which may help boost sales from the division.

But c hief executive Brian Brick has already warned hire sales will continue to be ''volatile'' for the rest of the year as it comes up against unusual trading patterns caused by the Queen's Diamond Jubilee and Olympics last year.

Cantor Fitzgerald's retail expert Freddie George said the online push could be "transformational".

He added the launch of the hire site will mean Moss Bros can "cross sell between its retail and hire customers, market accompanying categories and help generate repeat orders".

John Stevenson, analyst at Peel Hunt, said the online push posed a real "revenue opportunity", particularly in hire.

Moss Bros is also overhauling its high street chain to help boost trade, having revamped 24 of its 136 UK stores in the first 18 weeks.

Irn Bru maker AG Barr will shake off the disappointment of its failed £1.4 billion merger with Britvic by reporting a summer of fizzing sales, lifted by the UK heatwave.

The firm, based in Cumbernauld, near Glasgow, reports results for the six months to the end of July on Monday.

Revenues are expected to have surged almost 10% in its second quarter as drink sales soared along with the mercury.

That is expected to have lifted first-half sales 4.9% to £127.5 million.

Analysts at Panmure Gordon see its adjusted pre-tax profits rising 17% to £17.3 million.

However, despite the summer weather boost, Barr has warned investors to expect a "very competitive" market in its second half, with heavy promotions and discounts.

Barr's growth ambitions were dealt a blow in July when J2O, Fruit Shoot and Tango-maker Britvic snubbed a tie-up and decided to go it alone, despite more generous terms from its Scottish rival.

Barr, which dates back to 1875 and also makes Tizer and Rubicon, is also expected underline progress on overhauling manufacturing.

It has opened a new factory in Milton Keynes, which should help it slash costs and boost growth in the south of England.

Analysts at Canaccord Genuity said that when complete, it will be "one of the most efficient soft drink manufacturing facilities in the world".

Barr is reported to have been sniffing around popular soft drinks brands Lucozade and Ribena, before drugs giant GlaxoSmithKline offloaded them to Orangina Schweppes owner Suntory in a £1.35 billion deal earlier this month.

Shore Capital analyst Phil Carroll said: "We expect Barr to now focus on organic growth and bedding in its new factory."

Mitchells & Butlers, the UK's biggest operator of managed pubs, unveils latest trading figures on Thursday amid an £80 million investment drive by the group.

The Harvester, O'Neill's and All Bar One owner toasted a heatwave revenue boost earlier this year with like-for-like sales 2% higher during the nine weeks to July 20, nearly three times its growth rate over the year-to-date.

M&B, which has about 1,600 restaurants and pubs, recorded drink sales up 2.7% in the 14 weeks to July 20.

But chief executive Alistair Darby warned that "cash in people's pockets remains tight" and that they would demand "great service and excellent value when they eat and drink out".

Mr Darby said at the time he was pleased with the progress of the group's business transformation programme.

Earlier this year, the business, which employs 40,000 people, announced that it was placing upmarket, special occasions and family dining at the centre of its new investment programme.

It said it aimed to cash in on the three sectors, worth £35 billion.

The group set aside £30 million in capital expenditure in the year to October, subsequently rising to between £50 million and £80 million a year. Its pre-close trading update should reveal how much progress has been made so far.

Birmingham-based M&B serves around 130 million meals and 410 million drinks each year.

Adjusted pre-tax profits for the year to the end of September 2012 were £166 million.

Retailer Topps Tiles will reveal whether the recovering housing market has boosted recent trade when it updates the stock market on Wednesday.

The Leicestershire-based group, which has around 320 stores, saw underlying sales fall 1.5% in the 13 weeks to the end of June.

But at the time the group hinted that gathering momentum in the housing market may be feeding through, with boss Matthew Williams describing June trading as "more encouraging", as like-for-like sales returned to growth during the month.

Britain's housing market has seen rising mortgage approvals and prices, as it is inflated by government schemes such as Help to Buy and Funding for Lending.

However, there could be a negative effect from July's heatwave, with indoor DIY projects drying up as households basked in the sun.

DIY chain B&Q recently revealed soaring demand for outdoor goods between May and early August, but indoor DIY goods suffered, with sales of indoor paint dropping 10% during the quarter.

Meanwhile Topps has been slashing staff bonuses and employee hours to cut costs. It has targeted £2 million in cost savings by the end of September.

In July Topps said analysts on average expected it to report underlying pre-tax profits of £12.6 million for the year to the end of September, a slight dip on £12.8 million in 2012.

Analysts at N+1 Singer warn Topps faces resurgent competition and profits could be further dented by the heatwave. They see its profits falling to £12.3 million.

They said: "With increased competition from other specialists and the sheds, especially B&Q, we remain cautious on the outlook for Topps.

"Investors looking for exposure to an improving UK housing market would be better off taking profits after the recent rally."

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