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High street issues to the fore as Debenhams, JD Sports, and Primark owner AB Foods provide updates

Week Ahead includes trading statements from Primark owner Associated British Foods, Debenhams, and JD Sports, plus Q1 numbers from Unilever, Reckitt Benckiser and Rentokil Initial
Primark store
Primark already contributes more than half of AB Foods profits, and that could grow even further if it successfully expands into Europe and the US

There will once again be a bit of a retail theme coming through in the coming week, with updates due from a number of high street names including Debenhams PLC (LON:DEB), JD Sports PLC (LON:JD.), and Primark owner Associated British Food PLC (LON:ABF).

The discount clothing stores chain has established itself as the food to retail conglomerate most important division in recent years.

Primark already contributes more than half of AB Foods profits, and that could grow even further if it successfully expands into Europe and the US.

Given its MVP status, the value fashion retailer will almost certainly take centre stage once again when AB Foods publishes its interim numbers on Tuesday.

Back in November’ full-year results, Primark posted a 12% rise in revenues, and with shares trading at a premium to most other UK retailers, investors will be looking for similar growth once again.

As for the FTSE 100-listed firm’s sugar division, the company has previously flagged the impact of lower EU sugar prices, but investors will be hoping a recent profit warning from German sugar producer Südzucker is just a one-off and not an industry-wide issue.

Dividend cut fear for Debenhams

Investors will be nervous awaiting first half numbers from mid cap department stores group Debenhams PLC (LON:DEB) amid fears of a possible dividend cut as sales stay under pressure.

At the beginning of January analysts at Deutsche Bank and Citigroup predicted the FTSE 250-listed firm will likely to announce a dividend cut after a disappointing Christmas trading update.

Debenhams saw a 1.8% decrease in total in like-for-like sales in the 17 weeks to December 30, driven by a decline in the UK where it faced tough competition and a slowdown in consumer spending.

Swiss investment bank UBS recently trimmed its target price for Debenhams to 18p from 23p, saying the department store chain could see costs of over 13p for every £1 of in-store sales because of a channel shift.

Meanwhile, Mike Ashley’s Sports Direct International PLC (LON:SPD) is waiting in the wings, sitting on an increased total holding of 29.7% in Debenhams .

JD Sports set for record profits

After a bullish update and forecast upgrade back in January, investors already have a fairly good idea of what to expect from Sports Direct’s rival JD Sports’ full-year results on Tuesday.

Back in that statement, the sportswear and athleisure retailer said it expected profit before tax to top £300mln, with sales also set to jump despite “challenging comparatives”.

A couple of weeks ago JD completed the £400mln acquisition of US peer The Finish Line, so more detail on the plans for that business will be keenly eyed now it is officially part of the group.

Unilever under review

Consumer goods will also be in focus with Anglo-Dutch giant Unilever send to issue a first-quarter update having spent most of last year reviewing its business after rebuffing a US$143bn takeover bid from Kraft Foods.

Regarded for decades as the corporate equivalent of a super-tanker, the group announced in March plans to transform itself into a “simpler, more agile and more focused business”.

The announcement was the latest phase in the FTSE 100-listed group’s attempt to shed its reputation as a lumbering giant.

Thursday’s update will be too soon to determine whether the latest proposed restructuring is having a galvanising effect and will be more about progress towards the Marmite-maker’s ambitious target of achieving a 20% operating margin by 2020.

Top-line growth will also be a focus, with the group having achieved underlying year-on-year sales growth in 2017 of 3.1%; strip out the spreads business (Flora et al), which is being sold, and the growth rate improves to 3.5%, which is comfortably within the 3% - 5% range management has set.

Growth return for Reckitt Benckiser

Fellow global consumer goods firm Reckitt Benckiser Group PLC (LON:RB.) reported flat revenue for 2017 year but it expects a return to growth in 2018 after a pick-up in the final quarter.

The FTSE 100-listed firm reports its first-quarter result on Friday and analysts at UBS are forecasting organic sales growth of 2.8% driven by a strong cold & flu season although they think this recovery is widely anticipated by the market.

The Nurofen, Mucinex and has given guidance for organic sales growth of 2%-3% for full-year 2018, with its total sales growth guided at 13%-14%.

The Durex maker recently pulled out of the race to buy Pfizer Inc’s (NYSE:PFE) consumer healthcare business.

Pesky currencies eyed for Rentokil Initial

A first-quarter update from pest control and support services group Rentokil Initial PLC (LON:RTO) on Thursday will be watched closely after 2018 estimates were cut following full-year 2017 numbers at the start of March.

City analysts said then that they expected to reduce pre-tax profit estimates for the FTSE 100-listed firm by 4% amid concerns over the adverse impact of currency movements, despite the 2017 results matching expectations, sending its shares lower.

However, US broker Jefferies International upgraded its rating for Rentokil to ‘buy’ from ‘hold’ noting that the group had maintained momentum in pest control, improved its balance sheet capacity, while the risk-reward profile has been boosted by the pull-back in share price.

Cracking pace at Countryside Props.

A trading update from Countryside Properties will reveal whether the housebuilder has kept up the cracking pace it set in the first quarter of its financial year, which runs to the end of September.

In the final 13 weeks of 2017, the number of completions rose 47% to 852 units from 581 units the year before, although the private average selling price was down 11% at £394,000, reflecting management’s decision to reduce exposure to the top end of the market.

Whizzing through the completions at a faster-than-expected rate did leave the private forward order book 17% lower year-on-year at £243mln, so analysts will be keen to see how forward orders are progressing.

The outlook statement will also be of interest – particularly after the firm’s recent £135mln acquisition of Westleigh Group limited – with the firm having previously said it is confident of meeting 2018 growth targets as low-interest rates and the government’s Help-to-Buy scheme continue to support customer demand

Significant events expected:

Monday April 16:

Interims: Avacta Group Plc (LON:AVCR), Carr’s Group PLC (LON:CARR)

Finals: Shanta Gold PLC (LON:SHG)

Economic data: US retail sales; US business inventories; US Empire State manufacturing survey

Tuesday April 17:

Trading update: Rio Tinto PLC (Q1) (LON:RIO), Ashmore group PLC (LON:ASHM), Porvair PLC (LON:PRV)

Interims: Associated British Foods plc (LON:ABF), APC Technology Group PLC (LON:APC), Egdon Resources Plc (LON:EDR)

Finals: AA (LON:AA.), AFI Development PLC (LON:AFRB), Clearstar Inc (LON:CLSU), Christie Group plc (LON:CTG), Flowtech Fluidpower PLC (LON:FLO), Filta Group Holdings PLC (LON:FLTA), Highland Gold mining Limited (LON:HGM), JD Sports Fashion PLC (LON:JD.), Mi-Pay Group PLC (LON:MPAY), TP Group PLC (LON:TPG)

Economic data: UK unemployment; UK average earnings; German ZEW survey; US housing starts; US industrial production

Wednesday April 18:

Trading updates: Bunzl PLC (Q1) (LON:BNZL), BHP Billiton plc (Q3) (LON:BLT), Countryside Properties PLC (LON:CSP), Hunting Plc (LON:HTG), Jupiter Fund Management PLC (LON:JUP), Primary Health Properties PLC (LON:PHP), RELX PLC (LON:REL), SEGRO PLC (LON:SGRO), Telford Homes plc (LON:TEF)

Finals: Be Heard Group PLC (LON:BHRD), GYG PLC (LON:GYG), Mercantile Investment trust PLC (LON:MRC)

Economic data: UK, CPI, RPI, PPI, HPI inflation; eurozone CPI; US Fed Beige Book

Thursday April 19:

Trading update: Unilever plc (Q1) (LON:ULVR), Rentokil Initial PLC (LON:RTO), Sky PLC (Q3) (LON:SKY)

Finals: Camelia PLC (LON:CAM), Hvivo PLC (LON:HVO), Xeros Technology Group PLC (LON:XSG)

Interims: Debenhams PLC (LON:DEB), Acacia Mining PLC (Q1) (LON:ACAA), Gattaca Plc (LON:GATC)

Ex-dividends; FTSE 100 – BAE Systems PLC (LON:BA.), Barratt Developments PLC (LON:BDEV), Informa PLC (LON:INF), Lloyds Banking Group PLC (LON:LLOY) Standard Life Aberdeen PLC (LON:SLA)

Economic data: UK retail sales; US weekly jobless claims; US Philly Fed index

Friday April 20:

Trading updates: Reckitt Benckiser PLC (LON:RB.), Record PLC (LON:REC)


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