The new chairman of Marks & Spencer PLC (LON:MKS) will be put under the microscope at Wednesday’s first half results with investors focused on his strategy to turnaround the struggling clothing division.
Archie Norman, the former Asda chief executive who joined M&S as chairman in September, has a difficult task ahead as a tough UK retail market adds further pressure on the clothing and home arm.
Under chief executive, Steve Rowe, the company has already taken steps to improve clothing sales by revamping product ranges and prices.
Last year the group said it would close 30 stores as part of its restructuring to reduce the space dedicated to clothing.
M&S is expected to announce in its interims that it will ramp-up the store-closure plan amid weak trading conditions for UK retailers.
“We see potential to accelerate and extend the store closure programme; increase investment in lower entry price points to the benefit of volume sales growth while broadening range appeal to younger customers,” said HSBC.
“This will have a positive spin-off effect for online sales at the wider group level.”
Next fuelled concerns about the impact of a slowdown in consumer spending in its quarterly update by saying trading had been “extremely volatile”.
Consumers are feeling the pinch as rising inflation eats away at spending power.
Data from the British Retail Consortium showed that retail sales values fell by an annual 1.0% on a like-for-like basis in October, as consumers cut back on purchases on non-food items.
Wetherspoon's Tim Martin to bang the Brexit drum
While the Brexit vote has pushed the pound lower, sending inflation higher and weighing on disposable incomes – JD Wetherspoon PLC (LON:JDW) chairman Tim Martin has been a vocal supporter of the UK’s decision to leave the EU.
Martin is likely to bang the Brexit drum again when the pub operator reports its first quarter trading update. He believes the company will save an average of 3.5p per meal and 0.5 p per drink after Brexit as it would mean getting rid of EU food import taxes.
As for the business itself, ‘Spoons said in its full-year results back in September that it had got off to a good start in the current fiscal year.
The FTSE 250 group has been saying for a while now that it needs sales growth of around 3-4% this year if it wants profits to break through the £100mln barrier again this year.
Persimmon outlook in focus after Bank of England lifts interest rates
UK housebuilders Persimmon PLC (LON:PSN) posts its third quarter update and traders will be keen to see whether it remained resilient amid a slowdown in the UK housing market due to Brexit uncertainty.
Low borrowing costs, high levels of employment and a supply shortage of homes have continued to support the property market despite Brexit.
However, the housebuilders face a potential hit to demand after the Bank of England raised rates for the first time in a decade on 2 November. Persimmon’s outlook for the business will therefore be in focus along with any plans to tackle the challenge of rising interest rates and Brexit.
“We expect the following: a) the sales rate to be up slightly up y/y (year-on-year) (after reporting +2% for the summer months); b) the order book be up strongly still (although we assume slightly less than the 15% growth reported in Aug); c) some broad guidance on H2 margin, although like last year, it may remain too vague to drive an upgrade at this point; and d) guidance on year-end net cash, but no commentary on the potential usage of that cash at this stage,” said JP Morgan.
“Even if estimates don’t move on Wednesday, we still see scope for margin-driven upside, and we continue to expect the large cash balance to be used to increase shareholder returns and/or cash settle part of the large LTIP (long-term incentive plan), driving upgrades, which in combination could drive double-digit upgrades to EPS (earnings per share) in 2018.”
Significant announcements expected:
Trading updates: JD Wetherspoon PLC (LON:JDW), Novae Group PLC (NVA), OneSavings Bank PLC (LON:OSB), Persimmon PLC (LON:PSN), Tullow Oil plc (LON:TLW), esure Group PLC (LON:ESUR)
Interims: J Sainsbury plc (LON:SBRY), Marks & Spencer PLC (LON:MKS), JZ Capital Partners PLC (LON:JZCP), Sophos Group PLC (LON:SOPH) Wizz Air PLC (LON:WIZZ), Workspace Group plc (LON:WKP)
Finals: Begbies Traynor Group PLC (LON:BEG), Tracsis PLC (LON:TRCS)
Economic data: RICS UK housing survey