Supermarkets have been seeing a recovery as the revival of food price inflation, following the post-Brexit vote drop in the value of the pound, which has helped to lift margins, and Britain’s biggest retailer Tesco PLC (LON:TSCO) should confirm that trend when it reports first half results on Wednesday.
Analysts at Jefferies are expecting the FTSE 100-listed stores giant to publish a set of “upbeat interims”, with James Grzinic and co looking for “improved cash generation, good Q2 UK like-for-like delivery and a reiteration of the 3.5% to 4% margin ambition”.
However the revival of inflation has been countered by stagnant wage growth meaning the public has less spare money in its collective pocket, which Grzinic thinks could weigh on the outlook for retailers. Understandably then, investors will want to hear from Tesco about current trading and its thoughts on the UK economy.
Tesco is also in the middle of trying to complete its acquisition of Booker Group PLC (LON:BOK), although any comment this time around is unlikely given that the Competition & Markets Authority is not due to report back in December.
Earlier this year Tesco also hinted that it was ready to reinstate the dividend, so shareholders will be keeping their eyes peeled. The interims might come too soon for that though, with most analysts expecting the dividend to return at the end of the year instead.
Still not the Topps
Elsewhere on the high street, struggling tiles retailer Topps Tiles Plc (LON:TPT) will issue a pre-close season trading update on Wednesday, with the group having already warned with first half numbers in May that its full-year results will be at the lower end of expectations.
The small cap group saw a sharp decline in its like-for-like sales in the third quarter, albeit with the comparative period a year earlier having benefited from an increased level of housing transactions resulting from Stamp Duty changes kicking in April 2016.
However, even so, the market was disappointed in a 4.7% slide in like-for-like quarterly revenues, which was much worse than the 1.9%, decline seen in the first half, and does not bode well for the final quarter of its financial year.
Significant events expected on Wednesday October 4:
Finals: Future PLC (LON:FUTR), Walker Greenbank plc (LON:WGB)
Interims: Avacta Group Plc (LON:AVCT), Ceres Power Holdings PLC (LON:CWR), Tesco PLC (LON:TSCO)
Trading update: Topps Tiles Plc (LON:TPT)
Traffic figures: International Consolidated Airlines Group PLC (LON:IAG)
Economic data: UK services PMI report; BRC UK shop price index; US ISM non-manufacturing report