A thankfully quiet start to the year is in prospect, save for the trading updates from retailers.
Naturally, the post-Christmas update for most retailers is the big one, as the end of the year represents the biggest trading period of the year.
It is particularly so this time round as 2016 was a bad year for most retailers.
Fashion firm Next and home improvements products seller Topps Tiles fell 32% and 45%, respectively, last year, so shareholders will be hoping that the tills were ringing like my ears after New Year’s Eve celebrations and that the servers that power the online shopping sites were running close to capacity.
“The market will be watching closely to see what proportion of discounts has been given in the period,” said Ian Forrest, an investment research analyst at The Share Centre, which rates Next shares as a ‘hold’.
“Clothing sales generally have been good in recent times in the UK and there have been indications that consumer spending in the run up to Christmas was fairly strong. This follows better than expected interim results in September, but the high street stores saw a 16.8% fall in operating profit due to a larger proportion of price reductions,” Forrest notes.
“The other key information for investors will be whether full year profit guidance is maintained,” he added.
As for Topps, its full-year results announced in November were in line with expectations.
Like-for-like sales grew 4.2% in the 52 weeks to 1 October and that is one of the key metrics the market will be focused on.
The gross margin grew by seven-tenths of a percentage point and net debt fell to less than annual underlying earnings (EBITDA), pacing the way for a 16.7% rise in the full-year dividend.
House broker Liberum, not surprisingly, sees the share price collapse as a buying opportunity.
“As a category killer Topps is well placed to gain further market share irrespective of market conditions, supported by a strong balance sheet,” it said.
Significant announcements expected
Wednesday
Interims: Accrol Group Holdings PLC (LON:ACRL)
Trading statements: Next Plc (LON:NXT), Topps Tiles Plc (LON:TPT)
Thursday
Trading update: Costain Group PLC (LON:COST), Persimmon PLC (LON:PSN)
Friday
Finals: C4X Discovery Holdings plc (LON:C4XD)