Warm summer weather may have given sales at fashion retailer Next PLC (LON:NXT) a boost following a disappointing first quarter.
Analysts expect the hot weather in May and June to have lifted sales of summer clothing ranges in the second quarter, helping to turn around the company’s poor performance at the start of the year.
Next, which reports its second quarter update on Thursday, posted a 3% fall in full-price sales in the first quarter sales as rising inflation put a squeeze on consumers’ disposable incomes. Subsequently Next reduced the upper end of its full-year pre-tax profit guidance to £740mln from £780mln previously, with the lower end maintained at £680mln.
At the time, the group said UK consumer environment “remains challenging”, particularly in the clothing and homeware markets.
Graham Spooner, investment research analyst at The Share Centre, said the retailer has been having a tough year so investors will read its latest trading update with interest.
“Sales in the high street stores, which were weak in the first quarter, will be a focus. Directory sales were better but in May, the company lowered its forecasts for both full year sales and profits so the market will also be watching for any update on that.
“One bit of good news for investors is that the company has said previously that it does expect to pay four special dividends on a quarterly basis.”
Next’s trading update is just one of many companies we’ll hear from on Thursday, with a slate of interims from the likes of Shire PLC (LON:SHP), Serco Group PLC (LON:SRP), Aviva PLC (LON:AV), and the London Stock Exchange Group PLC (LON:LSE)..
Shire's Baxalta takeover eyed
Shire is expected to provide an update on the costs savings from its US$32bn takeover of US rival Baxalta when it reports its first half results.
The pharmaceutical company, which has been reviewing Baxalta's manufacturing operations, is likely to improve its profit margins on a further streamlining of the enlarged business, according to RBC Capital Markets. The City and Wall Street are also predicting updated guidance on revenues, the Canadian investment bank added.
However, a possible blemish is the group's drug for ulcerative colitis, Lialda, which has been competiting with cheap, copycat versions. Consensus second-quarter earnings are seen at around US$3.7bn, giving underlying earnings (EBITDA) of US$1.56bn. EPS is forecast to be around the US$3.60 per share mark.
Serco to report drop in first half earnings and revenues
Serco, the outsourcing company that came under fire a few years ago for overcharging the government for electronically tagging criminals, has already guided towards first half revenue of £1.5bn, an 8% decline on the previous year.
It also warned that underlying trading profit would be around £35mln for the first-half, down from £51mln for the first half of 2016 as its markets have become “markedly more unpredictable".
Serco, which provides public services across the world in the defence, justice, immigration, transport and health sectors, said order intake to date had been strong at around £2.4bn despite a slowdown in the outsourcing industry.
Order intake included a recently-signed contract worth £1.5bn to operate Grafton prison and a £450mln for Barts NHS Trust.
Significant events expected:
Trading updates: Next PLC (LON:NXT), UDG Healthcare PLC (LON:UDG)
Interims: Aviva PLC (LON:AV.), Centamin PLC (LON:CEY), esure Group PLC (LON:ESUR), Ferrexpo PLC (LON:FXPO), Inmarsat PLC (LON:ISAT), Mondi PLC (LON:MNDI), Portmeirion Group PLC (LON:PMP), RSA Insurance Group PLC (LON:RSA), Shire PLC (Q2), LON:SHP), Spirent Communications PLC (LON:SPT), Serco Group PLC (LON:SRP)
Economics: Bank of England interest rate decision