There won’t be many fireworks this side of the Atlantic on July 4 in the City of London – Wall Street will be closed for the US holiday, meanwhile, the diary is a sparse as one might expect for the sunny summer’s day.
English investors may well welcome a quiet morning, whatever the result of the football result in Moscow’s Spartak Stadium tonight.
Whilst fans may be reaching for the shelves in search of hangover respite on Wednesday morning, meanwhile, the markets attentions will also be on supermarket retail as J Sainsbury plc (LON:SBRY) is due to release a trading update.
It looks like the planned merger with Walmart Stores Inc (NYSE:WMT)-owned Asda could be badly needed by Sainsbury, if Wednesday’s first-quarter trading update from the supermarkets group proves the glum reading expected.
The latest industry data from Kantar Worldpanel revealed that sales at Sainsbury’s fell by 0.2% in the 12 weeks to June 17, while all its ‘big four’ rivals saw sales increase, with Asda, Tesco PLC (LON:TSCO), and WM Morrison Supermarkets PLC (LON:MRW) up by 1.8%, 1.4%, and 1.9% respectively.
The June Kantar data was a reversal from the 12 weeks to April 22, when the UK’s second biggest food retailer saw its sales rise by 0.2%.
For the first quarter, analysts at Barclays Capital expect Sainsbury’s to report a like-for-like sales drop of -0.1%, down from 0.9% growth in the fourth-quarter of last year.
But despite that forecast sales decline, Barclays raised their rating for Sainsbury’s to ‘overweight’ from ‘equal-weight’ as they assume an 80% chance of success for the proposed merger with Asda.
The upgrade came as the bank’s analysts increased their target price for the FTSE 100-listed firm to 375p from 300p previously, adding that they believe Sainsbury’s is worth 400p per share on a merged basis and 285p on a standalone basis.
Aside from the headline sales figures, investors will also be keen to see the performance of last year’s Argos stores acquisition, as well as Sainsbury’s convenience stores and online business.
Strong start to second half needed for Topps
All eyes will be on Topps Tiles Plc’s (LON:TPT) start to the second half on Wednesday.
The tiles retailer saw profits plunge in the opening six months of its fiscal year, blaming the Beast from the East and a general “softening” of the market.
Sales have held up pretty well, but that’s been largely down to various sales and promotions which certainly haven’t helped the bottom line.
Despite the “cautious” outlook for the remainder of the year, Topps has refused to budge on its full-year forecasts, which means it will need to have made a good start to its second half.
Wednesday July 4
US Independence Day:
Trading updates: J Sainsbury plc (Q1) (LON:SBRY); Topps Tiles Plc (LON:TPT), Mattioli Woods plc (LON:MTW), Walcom Group Limited (LON:WALG)
Interims: Staffline Group PLC (LON:STAF)
Traffic stats: International Consolidated Airlines Group PLC (LON:IAG)
Economic data: BRC shop price index; UK services PMI