Wednesday is due to see a hefty batch of financial results and trading updates from several key players across a litany of sectors including fashion retail, publicans, and computer services.
There will also be a little bit of a World Cup flavour with an update from Wetherspoons as a persistent CO2 shortage has been cutting off pub drink supplies at what is shaping up to be a lucrative summer for publicans around the country.
On the economic data front, what data there is will be coming from across the Atlantic, with the US wholesale trade figures and forward PPI expected.
CO2 shortage focus for Wetherspoon?
Investors will instead be looking to see what effect the recent CO2 shortage has had one beer sales.
At the end of June, some ‘Spoons ran out of John Smith’s and Strongbow as the shortage hit suppliers, even some of the big names such as Heineken.
Also of interest will be the impact of the World Cup as most of the chain’s pUBS don’t usually show football to try to create a family-friendly atmosphere.
Given England’s success at the current tournament, that is likely to have dented sales somewhat.
The recent warm weather should have offset some of that, though. Us Brits have reportedly been pouring into our local watering holes up and down the country to sink a jar or two, with pUBS with beer gardens benefitting the most.
Luxury gap at Burberry
A first-quarter trading update from Burberry PLC (LON:BRBY) – and its AGM on Thursday - will be the first chance for the luxury goods giant’s new management team to deliver their vision for the group.
In early March, Burberry appointed Riccardo Tisci as its new creative chief, and in April the group also appointed Gavin Haig to a newly created position of chief commercial officer, completing chief executive Marco Gobbetti’s team, with Gobbetti having taken over from Christopher Bailey last July.
In a recent preview, analysts at JPMorgan Cazenove said they expect the FTSE 100-listed firm to report a 4% rise in first-quarter like-for-like sales, helped by the relaunch of the firm’s heritage trench coat in April and old creative chief – and former CEO - Bailey’s penultimate collection.
They think this should lead to a 0.5% increase in first-quarter retail sales to £480mln which would remain relatively subdued growth versus their expectations for Burberry’s peers in what they said has been cited by luxury executives as a rather favourable luxury spend environment in the year-to-date.
The analysts think investors will also be keen to get granularity as to the spend of the Chinese consumer through the period.
They expect Burberry’s underlying outlook to be reiterated with a lower adverse foreign exchange impact of around £30mln for the full-year against previous guidance for £40mln.
The analysts noted that the expected lower adverse forex impact has driven a 3% increase to their current year estimates, with no change beyond then.
Upbeat update seen from Barratt Developments
In mid-May, the company reported its outlook for the full-year (to the end of June) remained unchanged. Net private reservations per edged up to an average of 302 from 299 in the corresponding period of 2017.
The sales rate of 0.8 net private reservations per active outlet per average week so far in 2018 had been in line with the previous year. Total forward sales were at record levels, up 2.5% year-on-year as at May 6 to £3.29bn, versus £3.21bn at the same stage of 2017.
Having said all that, the shares have been miserable performers this year, tumbling from around 650p to 500p, and shareholders will be hoping the management still sounds as confident in July as it did in May.
Deutsche Bank thinks Barratt shares are undervalued, though it admits the second half of the financial year will have seen dilution to margins as a result of the increased proportion of central London completions; London sites have been declining in profitability of late.
“However, as the central London exposure trades out, we believe the greater evidence of margin improvement, latterly followed by completions growth, should provide incremental upside to consensus estimates,” the German bank said in a preview.
Progress needed from Micro Focus
Half-year results from blue chip software and IT firm Micro Focus International PLC (LON:MCRO) will be closely watched after the group cut its revenue guidance in March on lower-than-expected licence income.
Analysts at UBS are predicting that the interim results will focus on progress made in resolving the group’s IT and sales attrition that caused the revenue miss as well as cash flow and debt issues and the rate of decline in the business.
In a preview they said: “Notwithstanding the weak guidance for the balance of the year, we note the licence comparatives are now getting very easy – in the October 2017 semester HPE Software reported a 20% licence fall, while Micro Focus was -17%.
“The April 2018 period is likely to be even worse, and investors will also scrutinise maintenance: In the 6 months to October 2017, both businesses saw around a 3% fall – it may well be worse in this reporting period.”
As has been the case for the past two years, the focus will be on the UK and how the jobs market is standing up given the uncertainty around Brexit.
Business confidence took a hit after the UK voted to leave the European Union, prompting firms to take a more cautious approach to hiring.
That has affected the recruiters – or talent acquisition specialists, as some like to be called – with only Robert Walters posting a rise in UK net fee income in the last round of updates.
Recent economic data has suggested consumer confidence is on its way back up after the first quarter blip though, so it will be interesting to see if business confidence is following suit.
Significant announcements expected:
Wednesday July 11:
Economic data: US forward PPI; US wholesale trade