Food and drink will be the main focus on the corporate news menu on Tuesday as William Morrison Supermarkets PLC (LON:MRW) kicks off the food retail sector’s Christmas trading updates.
The UK’s big supermarket groups are currently locked in the midst of a price war to combat the advance of the German-owned discount chains, Aldi and Lidl, while food price deflation has also been an issue.
However, the efforts of new management at Yorkshire-based Morrisons have looked to be paying off recently, with the firm seeing rising sales growth in 2016, which investors hope will have continued over Christmas and the New Year.
The company delivered like-for-like sales of +1.6% in the third quarter and, although it faces tougher comparatives for the Christmas period, analysts at Barclays predict a positive outcome.
They expect Morrisons to deliver like-for-like sales growth of +0.5% for the nine week period, with the latter weeks to be slightly less strong than the earlier weeks.
But their peers at BofA Merrill Lynch were less positive for Morrisons today downgrading their rating for the supermarket group to ‘underperform’ in a sector review.
READ: BofA downbeat on UK supermarkets ...
The BofA analysts said: “The return of ‘stark’ inflation and the difficulties for retailers in passing higher costs through to customers point to a tough 2017 for UK grocers and supermarkets.”
They think the UK supermarket sector will likely grapple with a slowing economy pushing customers towards cheaper offerings or discounts.
Aldi reported its own Christmas trading news today, saying sales at its British business rose over 15% in December compared to the same month in 2015.
Aside from the food sector, updates from other retailers will also be in focus on Tuesday, including online fashion firm Boohoo.com PLC (LON:BOO), fantasy gaming group Games Workshop PLC (LON:GAW), and drink specialists Majestic Wine PLC (LON:WINE).
Analysts at Peel Hunt pointed out that forecasts for Majestic now expect a very strong Christmas.
They noted that “in order to deliver full-year estimates, core retail LFL will have to be over 6% in H2, against a stiff comparative.”
But, the analysts added: “That is far from impossible, as availability should improve and customer loyalty has also been increasing”.
Significant announcements expected ...
Tuesday
Interims: Games Workshop PLC (LON:GAW)
Trading updates: Boohoo.com PLC (LON:BOO), Carr’s Group PLC (LON:CARR), Just Eat PLC (LON:JE.), GoCompare.com Group PLC (LON:GOCO), Majestic Wine PLC (LON:WINE), Saga Group PLC (LON:SAGA), Tarsus Group PLC (LON:TRS), William Morrison Supermarkets PLC (LON:MRW), Galliford Try plc (LON:GFRD), Big Yellow Group PLC (LON:BYG)