Big retailers to unveil Christmas trading figures
Tesco and Marks & Spencer are among a bevy of retailers to report to the market.
Britain’s retail heavyweights will reveal their Christmas trading figures this week amid mixed signs on the high street.
Tesco and Marks & Spencer are among a bevy of retailers to report to the market following a strong showing from Next and a profit warning from struggling Debenhams.
The supermarket giant, which has been undergoing a turnaround under chief executive Dave Lewis, is expected to continue along the road to recovery by posting strong sales figures.
Analysts at UBS are forecasting a 2.4% increase in like-for-like sales over both the Christmas period and the third quarter as a whole.
Tesco is experiencing strong momentum relative to its peers and in October Mr Lewis hailed a “significant milestone” after unveiling the first dividend payout for three years following a surge in half-year profits and sales.
The group posted a better-than-expected 27% rise in group underlying earnings to £759 million for the six months to August 26 after it notched up its seventh quarter in a row of rising sales.
Sreedhar Mahamkali, analyst at Macquarie Capital, said: “We expect a decent Christmas update from the sector with Tesco continuing to report the best like for likes in the sector.
“A key feature for a considerable period of time in Tesco’s recovery is the strong and consistent growth in grocery sales over the past several months.”
The group was further buoyed in December when its £3.7 billion takeover of wholesale group Booker was given the final all-clear by the competition watchdog, which Mr Mahamkali also believes will boost growth.
Meanwhile, retail bellwether Marks & Spencer is expected to record another decline at its troubled womenswear division.
Broker Numis predicts that clothing and home sales at M&S fell by around 1% in the festive third quarter, which it said will “clearly be influenced by the level of tactical promotional activity”.
M&S is coming up against a much tougher comparison from a year earlier, when clothing sales rose by an impressive 2.3%.
The group gave hope last November that its turnaround under boss Steve Rowe was gaining traction in the embattled clothing and home division after a better-than-feared second quarter performance, when sales dipped 0.1% after a 1.2% fall in the previous three months.
But Numis’ Andrew Wade said: “October marked a particularly poor start to the quarter for the clothing retailers, and the early signs are that the Christmas run-in has been mixed.
“We continue to believe that the clothing and home division will take longer, and be more costly, to turn around than expected, and are concerned about the ‘repositioning’ now required in the food business.”
Numis is also forecasting food sales to disappoint once again after a shock admission at the group’s half-year results that it needed to review prices and ranges.
It believes sales across M&S food halls – once the group’s star performer – will come in broadly flat once more after falling 0.1% in the second quarter.
M&S said alongside half-year results in November that it would speed up plans to close under-performing clothing stores and slow expansion of its Simply Food chain as it battles to restore its high street fortunes.
The group’s curtailed plans for the food business will now see it open 80 Simply Food shops this financial year, having previously aimed for 90 stores.
It also said it would further “reshape” the clothing and home arm to focus on the most successful locations, while driving more online sales.
Half-year figures showed a 5.3% fall in underlying pre-tax profits to £219.1 million for the six months to September 30.
Among the other retailers reporting figures next week are AO World, Morrisons, Sainsbury’s, Ted Baker and John Lewis.