With the crucial festive period finally over, it is time for retailers to count the coppers with the post-Christmas trading update season kicking off in earnest tomorrow.
High street fashion firm Next Plc (LON:NEXT) and home improvements products retailer Topps Tiles (LON:TT) will provide the first glimpse of the sector performances.
In a non-food retail sector review today, analysts at HSBC Global research said that while high street sales are set to disappoint, with footfall down 7.3% year-on-year on Boxing Day following around 6% declines on December 23 and 24, online trading should continue to grow.
The HSBC analysts said they think that, while Next’s Christmas sales should be better on weak comparatives, higher temperatures in December and a switch in focus to leisure and Christmas gifts will have done little for wider apparel sales, which are already under pressure
And they added that given the online and catalogue operation Next Directory’s reliance on credit, the deterioration in high street footfall is also a negative leaving risk to the downside for the retailer’s revenue and margin expectations.
Next’s third quarter trading update, released on November 2, was worse than expected against tough comparatives, with revenue lower than expected after subdued trading in August and September
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.
In a recent note, house broker Liberum, said: “As a category killer Topps is well placed to gain further market share irrespective of market conditions, supported by a strong balance sheet.”
Significant announcements expected …
Trading statements: Next Plc (LON:NXT), Topps Tiles Plc (LON:TPT)
Interims: Accrol Group Holdings PLC (LON:ACRL)