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Next firmly on the back foot as shoppers batten down hatches

Week ahead: Next, Kingfisher, Smiths Group ,Satellite Solutions ...
picture of Next model
It's tough out there, even for Next

Fashion retailer Next Plc (LON:NXT) is expected to unveil a decline in full year profits on Thursday as the UK clothing market comes under pressure.

In January the company cut its guidance for full year pre-tax profit to £792mln, down from the £805mln indicated previously, as it reported drop in sales over the key Christmas period.

The firm also forecast pre-tax profit in the range of £680mln-£780mln for full-year 2017-18, below analysts' current average forecast of £784mln.

Next’s disappointing trading update came as UK clothing retailers face the hurdle of rising inflation due to a weaker pound following last June’s Brexit vote.

Data from the BRC-KPMG Retail Sales Monitor showed non-food sales in the UK fell 0.4% on a like-for-like basis and 0.2% on a total basis during the three months ending February 25.

Graham Spooner, investment research analyst at The Share Centre, said the market will be hoping for better news from the clothing retailer, which last month announced former Bunzl boss Michael Roney as its new chairman to take over from John Barton.

“A major issue for the group is the increase in import costs due to the weak pound and investors are keen to see if that is going to be passed on to customers or absorbed by the company.”

Tuesday 

Tonic maker Fevertree Drinks PLC (LON:FEVR) is due to announce its preliminary results.
 
Markets already have a rough guide on what to expect, with the London-based firm revealing back in January that it expects full year revenue to come in at around £102mln, 73% higher than what it reported a year earlier.
 
The company didn’t guide on profits, but Whitman Howard analyst Chris Wickham expects them to come in ahead of expectations, while Shore Capital analyst Phil Carroll is forecasting a pre-tax profit of £36mln.
 
The consensus is for diluted earnings per share (EPS) to continue its positive momentum and come in at around 24p, although Wickham is predicting 25.2p.
 
Given Fevertree’s premium valuation, investors will be keeping a close eye on sales so far in 2017, with continued growth vital to underpin the share price.
 
Upgrades tend to follow Fevertree announcements, and should overall sales growth show no real sign of slowing, this one could follow a similar theme.
 
The one slight negative in January’s update was that there seemed to be a half-on-half slowdown in growth in continental Europe and in the USA; two big, as yet unrealised opportunities for the company.
 
Keep an eye on how things have fared in these markets so far in 2017.
 
There should also be an update on the company’s new mixers. To try and tap the huge American market (where they prefer dark spirits to, say, gin), Fevertree has been working on new ginger beer products so it’ll be interesting to hear how these are coming along.

Wednesday

Another heavyweight retailer Kingfisher plc's (LON:KGF) restructuring efforts will come under the microscope on Wednesday when the B&Q owner reports its full year results.

In its last trading update in November, the DIY company reported a slowdown in third quarter sales, blaming softer sales in France.

However it said it expects to see a change of pace in 2017 on the back of its ONE Kingfisher overhaul programme.

Broker Jefferies believes its recent underperformance is not over yet as the housing market looks set to soften in the UK, where the company trades under the B&Q and Screwfix brands.

“The [French] business continues to protect profits by de-emphasising promos (we assume +10bps FY 16/17 EBIT margin); however, a more front-foot approach is likely needed from here,” Jefferies said.

Numis expects an 11% increase in full year pre-tax profits of £700mln, before restructuring costs of £775mln.

Monday

Satellite Solutions Worldwide Group PLC (LON:SAT) is positioning itself to solve the problem of how to get a decent broadband/mobile connection in remote parts of the world.

The company is on an acquisition spree as it builds on its core UK base. The model is similar to here, set up a hub operation and then buy up rivals to build scale.

Deals earlier this month in Australia and Norway were typical.  SSW bought satellite broadband provider BorderNET and Norwegian broadband solutions providers NextNet and AS Distriktsnett.

“Having established strong hubs in Norway and Australia last year, we can now readily acquire sub-scale, local businesses and rapidly turn them into profitable assets by integrating them onto our global platform,” said chief executive Andrew Walwyn.

Finals are on Monday and the key figure to look for is the number of customers. Satellite has long talked about hitting the 100,000 milestone by the end of its next financial year, although it now expects this to happen a little faster than even it had first hoped.

Friday

Smiths Group PLC (LON:SMIN) is the perennial bid bridesmaid. Rumours of suitors abound, but none seems prepared to take the plunge and make an offer to the engineering conglomerate.

Results are normally predictable, with the ups and division of its four key divisions seemingly always managing to even themselves out.

Morgan Stanley forecasts first half sales of £1.528bn,  operating profit of £235.2mln, and EPS 38.1p.

Oil seals group John Crane will be the worst performer and medical the best. News of a structural shake-up might spark the shares into life, but is unlikely.

Week ahead 20-24 March 2017

Monday 20 March 

Interims

Finsbury Food Group PLC (LON:FIF), Volution Group Plc (LON:FAN),

Diurnal Group Plc(LON:DNL)

Finals

MD Medical Group Investments Plc (LON:14NY), John Laing Infrastructure Fund Ltd (LON:JLIF); MaxCyte Inc (LON:MXCT); Taptica International Ltd (LON:TAP)
Satellite Solutions Worldwide Group (LON:SAT); One Media IP Group PLC (LON:OMIP)

 

Tuesday 21 March

Interims: Bellway PLC (LON:BWY), Earthport plc (LON:EPO).  Finals: Judges Scientific PLC (LON:JDG), Nahl Group (LON:NAH, Smart Metering Systems (LON:SMS, IQE plc (LON:IQE),Hansteen Holdings plc (LON:HSTN, Augean PLC (LON:AUG), Amec Foster Wheeler PLC (LON:AMFW),888 Holdings PLC (LON:888),EKF Diagnostics Holdings PLC (LON:EKF),EnQuest Plc (LON:ENQ), Ubisense Group PLC (LON:UBI), Vectura Group PLC (LON:VEC), Fevertree Drinks Plc (LON:FEVR),Safecharge International Group (LON:SCH)

AGM / EGM: River & Mercantile UK Micro Cap Investment Co (LON:RMMC), Blue Prism Group Plc (LON:PRSM), One Media IP Group PLC (LON:OMIP). 21/03/2017 Electronic Data Processing PLC (EDP)

Trading statement: IG Group Holdings PLC (LON:IGG)

 

Wednesday 22 March

Interim: Softcat Plc (LON:SCT). Finals: Xaar PLC (LON:XAR), Kingfisher PLC (LON:KGF), Quixant (LON:QXT)

 

Thursday 23 March

Interim: Kier Group PLC (LON:KIE).  Finals: Curtis Banks Group Plc (LON:CBP, Futura Medical PLC (LON:FUM), Next Plc (LON:NXT),SOCO International PLC (LON:SIA), Science in Sport Plc (LON:SIS)

AGM / EGM: Conygar Investment Company (The) PLC (LON:CIC)

Trading Statement: Halma PLC (LON:HLMA)

Ex-Dividend: Private & Commercial Finance Group plc (LON:PCF, Octopus Second Aim Vct Plc (LON:OSEC), Redrow plc (LON:RDW), Segro (LON:SGRO), Tristel Plc (LON:TSTL) NWF Group plc (LON:NWF), Meggitt plc (LON:MGGT), Bovis Homes Group PLC (LON:BVS), Dunelm Group PLC (LON:DNLM), Galliford Try plc (LON:GFRD), Heavitree Brewery PLC (LON:HVT), BlackRock Latin Am (BRLA)

 

Friday 24 March

Interim: Smiths Group PLC (LON:SMIN). Final: Frontier Smarttechs Group Ltd (LON:FST)

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