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Retailers and recruiters in week ahead spotlight with results from N Brown, WH Smith, PageGroup and Hays

The week ahead sees updates from N Brown, WH Smith, Hays, PageGroup, Greggs, RPC Group and Marston's
N Brown
N Brown reports its interims on Thursday

Retailers and recruiters are in the spotlight in the week ahead with interims from Brown (N) Group PLC (LON:BWNG), full-year earnings from WH Smith Plc  (LON:SMWH), and trading updates from Hays plc (LON:HAS) and PageGroup PLC (LON:PAGE)

High street retailers have been struggling to lift sales due to weak consumer confidence and online competition.

On Thursday Ted Baker PLC (LON:TED) posted weaker-than-expected first-half revenues and warned that the environment was challenging as it took a hit from the collapse of House of Fraser, where it has a number of concessions.

Investors will be keen to see how the next round of retailers to report earnings have coped in the tough market conditions. 

Uncertainty over who will lead N Brown  

News last month that the chief executive is to step down is a good cause for N Brown shareholders to be nervous.

Angela Spindler left at the end of September to be replaced, on an interim basis, by Steve Johnson, the chief executive officer of the group’s financial services business.

That does not bode well for Thursday’s interims given that the company said in its June trading update that, although it had posted a 0.4% increase in the thirteen week period ended June 2 (the first quarter of the retailer’s fiscal year), the growth was entirely due to a 9% rise in financial services-related activity, rather than product sales, which fell by 2.8% year-on-year.

The retailer also announced that it was pondering whether to close down its bricks and mortar shops as three-quarters of its revenue now comes from online orders.

Shareholders will be hoping for an update on those plans and also crossing their fingers that Spindler’s departure was not precipitated by a poor trading period.

Hays and PageGroup shrug off Brexit uncertainty

International job markets have led growth for recruiters PageGroup and Hays as UK employers exercise more caution on hiring decision amid Brexit uncertainty.

For PageGroup, which reports its third-quarter results on Wednesday, the Europe, Middle East and Africa region is its star performer having accounted for 49% of gross profit in the first half.  

The company delivered a 12.5% increase in total gross profit for the first six months of the year with growth across all regions apart from the UK.

UBS expects the firm to report third-quarter like-for-like growth of 16%, driven by a strong performance in France and Germany. The broker estimates the UK will decline 2%.

Sector peer Hays posts its first-quarter results on Thursday with UBS predicting 10% growth in gross profit after a 15% increase in the fourth quarter.

UBS believes the company's performance will be boosted by a 16% increase in gross profits in Germany and has forecast growth in Australia and the UK of 9% and 2% respectively.

“The focus is likely to shift onto how sustainable momentum will be going into FY19 given tougher comparatives,” it said.

Despite weaker business confidence in the UK, Hays still achieved a like-for-like rise of 2% in annual gross profit in the region last year as gains in private sector job placements in IT, construction, property and office support offset declines in public sector placements such as education.

But Germany continued to lead the way with record like-for-like net fee growth of 16%.

Travel business drives growth at WH Smith

Ahead of WH Smith's full-year results UBS is forecasting £145mln of pre-tax profit, earnings per share of 110.3p and a 52.5p full-year dividend.

“In its pre-close statement, WH Smith highlighted another strong performance from the travel business (where we expect LFL of 3%), and a performance in High Street in line with expectations (where we assume -3%).

“Travel is now the dominant business within the group and the focus will be on the opening programme, especially overseas, and whether there is any chance of entering the North American market.

“In the High Street business, there seems little sign yet that the value retailers are undermining the business model which seems based on premium pricing for in prime locations, combined with rotation of products and services to continue driving footfall.”

Fingers crossed for more tasty morsels from Greggs

Investors will be hoping to see a continuation of the positive trends flagged back in early summer as Greggs updates the market on Tuesday.

The baker’s last commentary, back in July, flagged a return to growth for May and June, leading to what analysts described as “a satisfactory set of interims this morning.”

Since then, the shares have traded slightly better – albeit, still lower for the year to date.

Expectations are somewhat muted, so any material change should tip the balance in either direction.

Busy time for RPC Group

RPC Group PLC (LON:RPC) has been busy in the past few months, with Europe’s biggest plastic manufacturer, updating the market on acquisitions, disposals and news of potential takeover talks with investment group Apollo Global Management and private equity firm Bain Capital.

In a preview of RPC’s second-quarter trading update due on Monday, George Salmon, equity analyst, Hargreaves Lansdown said: “Before news of a potential takeover broke, the shares had come under pressure from short interests, with the advent of tighter regulation around single-use plastic also ruffling a few feathers.”

He added: “With plastic usage moving up the agenda, we expect RPC will give progress made in its innovation centres top billing in these results.

“We hope to see to the group allocate greater investment to developing more eco-friendly plastic solutions.”

Marston’s hoping to replicate summer performance in the food-focused segment

Brewing group and publican firm Marston’s plc (LON:MARS) will be hoping to capitalise on its strong performance during the summer period when it issues a trading update for the fourth quarter on Wednesday.

The firm defied expectations in the third quarter as the hot summer weather and the performance of the England team drove customers into its pubs.

Graham Spooner, an investment research analyst at The Share Centre, said this time around investors will be paying particular attention to the destination and premium pubs, which focus more on food, as this segment saw a drop in sales in the third quarter.

He added that Marston’s accommodation segment, which has been “a growing part of the offer”, would also be of interest due to its rising prominence in the figures.

Spooner also said improved sales from rival firm Mitchells & Butlers PLC (LON:MAB) may “bode well for the wider sector”.

 

Significant announcements expected:

 

Monday, October 8:

US Columbus Day public holiday

Trading updates: RPC Group PLC (LON:RPC), Codemasters Group Holdings PLC (LON:CDM)

Finals: Bioventix PLC (LON:BVXP)

 

Tuesday, October 9:

Trading update: Greggs plc (LON:GRG)

Finals: Ceres Power Holdings PLC (LON:CWR), St Ives PLC (LON:SIV), YouGov PLC (LON:YOU)

Interims: LiDCO Group plc (LON:LID)

 

Wednesday, October 10:

Trading updates: Marston’s plc (LON:MARS), Pagegroup PLC (Q3), (LON:PAGE), Telford Homes plc (LON:TEF)

Interims: Vertu Motors PLC (LON:VTU), Walker Greenbank plc (LON:WGB)

Economic data: US forward PPI data; US wholesale trade

 

Thursday, October 11:

Trading update: Hays plc (LON:HAS)

Finals: WH Smith Plc (LON:SMWH), Volution Group PLC (LON:FAN)

Interims: N Brown Group PLC (LON:BWNG)

Ex-dividends: Barratt Developments PLC (LON:BDEV), GlaxoSmithKline plc (LON:GSK)

Economic data: US CPI, US weekly jobless claims

 

Friday, October 12:

Finals: Produce Investments PLC (LON:PIL)

Economic data: US import, export prices; US consumer sentiment


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