Week ahead: Recruiters to provide Brexit insight while Tesco delivers finals

Week ahead: Tesco, Pagegroup, Hays, JD Sports, WH Smith ...

Proactive Published 07/04/2017

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Wednesday 12 April – Tesco, Pagegroup

Tesco PLC (LON:TSCO) has been battling pricing pressures, taken a big fine and dealt with an uncertain economic outlook – all while it tries to complete an acquisition publishes its annual results.

The consensus in the City is for the supermarket giant to post an annual pre-tax profit of around £784mln on revenues of £55.7bn next Wednesday.

Even with the various issues, analysts at Macquarie think investors will be in for a pleasant surprise.

“We are firm buyers of Tesco into the full-year update. We expect a beat and look for a confident outlook.”

More important, will be a commitment to see through the acquisition of cash and carry chain Booker PLC (LON:BOK) where some shareholders have queried the £3.7bn price tag.

Read: Tesco hoping to put Booker doubts to bed

UK recruiter Pagegroup plc (LON:PAGE), formerly known as Michael Page International, delivers its first quarter trading update on Wednesday.

Pagegroup is a bellwether for UK white collar recruitment, so what it says about the general environment now that Article 50 will be almost as closely watched as the numbers themselves.

Last month the company reported its full year results, which showed revenue and profit rose on the back of growth in its businesses in Continental Europe and Latin America.

The UK, on the other hand, suffered at the hands of Brexit as recruiters became more cautious about hiring amid all the uncertainty. It also experienced difficult trading conditions in Greater China, Brazil and the US.

Pagegroup is working to diversify its business to make sure any impact from Brexit or tough trading in some of its markets will be offset by growth in more profitable areas.

Tuesday 11 April – JD Sports.

In a January update, JD Sports Fashion PLC (LON:JD.) said headline profit before tax for the year to end February will come in ahead of expectations at up to £230mln.

Strong like-for-like growth in the first half looks to have continued into the second, while the sportswear seller has also been expanding across Europe.

Any updates on the roll-out strategy and on the planned tie-up with Sport Zone in Spain and Portugal will be closely watched.

At the half-year, the group hinted that the weak sterling could have an impact on margins, although it’s since suggested it is confident it can keep those under control. Either way, investors will be looking out for any further information.

Shares have risen 23% this year so far on the encouraging trading updates.

Thursday 13 April- Hays

Fellow recruiter Hays reports its third quarter update on Thursday with the focus likely to be on Brexit’s impact on UK hiring.

While the company has divisions across the globe, a third of its revenue last year was generated in the UK.

“When economic conditions become less certain, companies will quickly freeze recruiting, hitting revenues,” said Hargreaves Lansdown. “The high proportion of commission in staff salaries helps to soften the landing, but the impact on profits can still be harsh.”

At the first half results in February, the company tried to reassure investors that recruitment in the UK had stabilised after an initial stumble following last June’s Brexit vote.

The group also reported growth in its Europe, Australia and Asia businesses as it reported a 17% increase in pre-tax profit for the six months to 31 December.

UBS expects a 5% decrease in UK like-for-like sales in the third quarter, offset by a 14% increase in international like-for-like sales. In total, the bank sees like-for-like sales growth of 6%, including a 2% benefit from extra trading days due to a later Easter.

“With 9mths of the FY year now completed Hays typically comment on market expectations, but with consensus at £203m for FY17 EBIT we do not expect any material changes.”