Once again the focus when Marks & Spencer Group PLC (LON:MKS) reports its full year results on Wednesday will be on the flagging women's clothing business.
The retailer has been shaking up its management team and overhauling the business in an effort to turn it around but so far with little apparent success.
In its third quarter to 31 December, the company claimed its turnaround had started to bear fruit with its first quarterly rise in underlying clothing and homewares sales in nearly two years.
The high street stores group said its clothing & home like-for-like sales rose by 2.3% while food sales rose 0.6%.
However, M&S chief executive Steve Rowe warned that M&S’s fourth quarter numbers would be adversely affected by a later Easter.
Rowe, who took over the reins from Marc Bolland in January 2016, promised last year to make fixing the struggling clothing arm his “number one priority”. His plan involved improving the quality of product ranges and lowering prices.
HSBC said these initiatives come at a “significant cost” of between £500mln to £550mln but were “necessary” to resuscitate the clothing division.
“The value of these investments will be enhanced by new management appointments… ,” it said.
On 3 May, the retailer poached Jill McDonald, the boss of bicycle and car parts retailer Halfords, to lead the clothing business.
Later that same week M&S announced it had taken on former Asda chief executive, Archie Norman, as its new chairman.
Norman helped to turnaround Asda in the 1990s and has also served as chairman of ITV, Lazards and Hobbycraft and gives M&S what look seems to be a powerful team up top.
HSBC expects like-for-like sales in the clothing arm to turn negative in the fourth quarter, but sees potential for a return to growth from fiscal year 2018 on the back of positive momentum.
The bank estimates 2017 earnings per share (EPS) of 29.15p, down from 34.91p the previous year. In 2018 it predicts EPS of 30.76p.
Barclays expects underlying pre-tax profit to fall to £596mln from £684.1mln the prior year and an unchanged dividend of 18.7p, saying the focus will be on any forward-looking statement on the group’s plans and the state of the wider market as rising inflation shrinks disposal incomes and impacts clothing retailers.
“We would especially be looking for an update on the following: gross margin outlook, sales outlook, UK space reorganisation/international exits and interest/tax assumptions for 2017/18."
Kingfisher’s B&Q and Screwfix brands tipped to continue fine form
The UK and Ireland business was the highlight when Kingfisher reported its full-year results back in March, as the French division limped over the line.
Recent data from Barclays has showed a strong performance for the DIY sector in the UK as a whole, and the bank is expecting “healthy” first quarter sales figures.
As for France, Kingfisher made no bones of the fact that there would be no quick-fix for its French operation, so expect to see a continuation of that subdued trading on the other side of the Channel.
Investors will also be keeping an eye out for the progress being made with its “ambitious” One Kingfisher strategy, although given that there was a full update only two months ago there might not be too much to be said.
Elsewhere, the weak sterling has been a problem from a lot of retailers which import products from abroad and Kingfisher is no different.
Earlier this year, chief financial officer Karen Witts said the group could afford to “invest in prices where we need to do so”. It will be interesting to see if this is still the case or if customers can expect to see a hike in prices at their local B&Q.
Competition threatens to spoil De la Rue’s party
That should mean underlying operating profit for the year to 25 March of £66.4mln, it added.
Identity Systems and Product Authentication & Traceability product lines have been going well while the banknote printing business has been steady.
Shares had also been going well until earlier this month when Citigroup pointed out a potential problem in Malta, where rival Crane is soon to open a
new US$100mln banknote printing facility.
Crane is a supplier of paper for US dollars and is looking to broaden its reach believes Citi, which may have pricing implications for the whole sector as the new capacity comes on stream.
Citi is worried enough to have downgraded De La Rue to neutral from buy as a result, since when the shares have dropped by around 5%.
Final: McKay Securities PLC (LON:MCKS)
Final: Hibernia REIT Plc (LON:HBRN); Shaftesbury (LON:SHB); Homeserve PLC (LON:HSV); Assura Group Ltd (LON:AGR); De La Rue plc (LON:DLAR); Electrocomponents PLC (LON:ECM); Cranswick plc (LON:CWK); Big Yellow Group Plc (LON:BYG); Severn Trent PLC (LON:SVT); AVEVA Group PLC (LON:AVV)
Wednesday 24 May
Finals: Mediclinic International Plc (LON:MDC); Vedanta Resources PLC (LON:VED); Pennon Group plc (LON:PNN); Schroder Real Estate IT (LON:SREI); Marks & Spencer Group PLC (LON:MKS); Lombard Risk Management plc (LON:LRM); Great Portland Estates PLC (LON:GPOR); Babcock International Group PLC (LON:BAB); Hogg Robinson Group PLC (LON:HRG)
Thursday 25 May
Finals: Caledonia Investments Plc (LON:CLDN); Tate & Lyle PLC (LON:TATE); United Utilities Group PLC (LON:UU.); Wizz Air Holdings Plc (LON:WIZZ); Halfords Group plc (LON:HFD); MITIE Group PLC (LON:MTO); PayPoint PLC (LON:PAY); Pets at Home Group Plc (LON:PETS); Intermediate Capital Group PLC (LON:ICP); Helical Bar PLC (LON:HLCL)
Friday 26 May