It might be the Independence Day holiday in the US on Tuesday, but in London there will be no break, and with a trading statement due from retailer J Sainsbury plc (LON:SBRY) the market will likely have to digest its biggest bit of corporate news for the week.
Sainsbury’s first-quarter update will be the first time the retailer has not released separate data for its supermarkets business and last year’s Argos acquisition, instead it will combine the two numbers.
Back at the start of May, Sainsbury posted full-year results showing the takeover of the catalogue-based high street retailer boosted sales by over 12%, although its core supermarket operations saw sales continue to decline.
READ: Sainsbury's weak as supermarkets sales continue to decline, although Argos provides an overall boost
For the 52 weeks to 11 March 2017, Sainsbury’s group sales rose by 12.7% to £29.112bn, up from £25.829bn a year earlier, with like-for-like sales, excluding fuel, at the supermarkets business falling by 0.6%, against a 0.9% decline in the previous year, while Argos sales were up 4.1%.
This time out, Barclays Capital is forecasting a 1.5% rise in group like-for-like sales as the challenges of the food retail business in the face of increased competition and cost price pressures continue to be cushioned by a resilient performance from Argos.
But given the worries over the impact of rising inflation and Brexit uncertainties on consumer sentiment, investors will be looking closely at any outlook comment from Sainsbury’s boss, Mike Coupe for any signs of cracks starting to appear in the retailer’s veneer.
Imagination needed
Aside from Sainsbury’s, full-year results from Imagination Technologies PLC (LON:IMG) should also attract interest, although given the under-pressure chip maker’s recent announcement that it has started a formal sale process of the whole group coupled with the royalty situation with key customer Apple Inc (NASDAQ:AAPL) the numbers may have limited importance, according to analysts at UBS.
In a preview they said: “Instead, we believe the main focus will be on 1) an update on the sale process although this will likely be limited unless there is a formal bid announcement; 2) an update on the discussions ongoing with Apple to resolve the dispute between the two … 3) The current net debt position and outlook going forward.”
READ: Imagination Technologies put up for sale in wake of Apple dispute
The analysts added: “As a reminder, Apple has claimed it will no longer use Imagination IP in its new products in 15 months to 2 years time and as such does not expect to make royalty payments. Imagination has therefore commenced the dispute resolution procedure under the licence agreement with a view to reaching an agreement through a more structured process.”
UBS estimates Imagination reporting group revenues of £139mln, and adjusted underlying earnings (EBIT) of £21mln, with a net debt position of £28mln at the year-end.
Significant events expected on Tuesday July 4:
US Independence Day holiday
Trading updates: J Sainsbury plc (LON:SBRY), Costain Group PLC (LON:COST), Staffline Group PLC (LON:STAF)
Finals: Imagination Technologies PLC (LON:IMG), Solid State PLC (LON:SOLI)
Interims: RM Plc (LON:RM), St Modwen Properties PLC (LON:SMP)
Economic data: UK BRC shop price index, UK construction PMI