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Troubled retail sector in focus as Quiz, Topps Tiles and Pets at Home report latest results

The day ahead includes full year results from Topps Tiles and Pets at Home along with interims from Quiz and Pennon

Quiz
Quiz reports its interims after issuing a profit warning in October

The struggling retail sector will be in the spotlight again on Tuesday when the latest results from Quiz Plc (LON:QUIZ), Topps Tiles Plc (LON:TPT) and Pets at Home PLC (LON:PET) are released.

Clothing retailer Quiz reports its interims after issuing a profit warning in October, blaming the collapse of House of Fraser.

The company, which has historically operated 11 House of Fraser concessions and sold its products through the department store chain’s website, said in a trading update last month that sales at its stores and concessions weakened in September due to less footfall.  

Quiz also took a £0.4mln charge in the first half related to House of Fraser’s entry into administration in August after which Sports Direct International agreed to buy the chain for £90mln.  

However, revenue in the first half still rose 19% year-on-year to £66.7mln, as an unusually hot summer helped sales.

The group expects earnings (EBITDA) for the first half of at least £5.5mln, which is £1.5mln lower than its previous estimate, as a result of worse-than-expected sales through third-party online partners in the second quarter, a poor performance of UK stores and concessions in September and the provision against outstanding debt owed by House of Fraser.

Quiz said it was working closely with its third-party online partners to try to boost sales in the second half.

Investors will be hoping the company has made progress in its efforts to turn around its performance.

Improved final quarter helps Topps Tiles beat market forecasts

Tiles retailer Topps Tiles PLC (LON:TPT) will publish its full year results with the company already saying it expects profits to beat market forecasts after improved trading in the fourth quarter.

In a trading update last month, the company said it expects adjusted pre-tax profits for the year to be slightly ahead of the top end of the current range of market expectations, which stands at between £14.6mln and £15.2mln.

The company said adjusted revenues for the year are expected to be in the region of £215mln, up from £211.8mln a year ago. Like-for-like (LFL) revenues for the year were flat when compared to the prior year, it said.

“The key question is whether this is a boost from catch-up spending and pent-up demand, or a more sustainable trend,” said Peel Hunt.

“Forecasts for FY19 are based on flat LFL sales growth and tight cost control. It should be noted that comparatives for the first quarter are tougher, rising to +3.4% LFL from -3% in Q4 2017, hence we assume that LFL sales will return to negative territory before recovering to flat over the remainder of the year.”

Investors await fresh strategy from Pets at Home 

Full year results from Pets at Home will come alongside a strategic review that should explain how the group plans to tackle a challenging retail environment.

Nicholas Hyett, equity analyst at Hargreaves Lansdown commented: “Management expects profit momentum to continue, but we’ll be keeping an eye on potential flies in the ointment.” 

He added: “In order to compete with online sellers, the group’s been cutting prices. That’s kept customers coming through the doors and has helped revenues head in the right direction, but it’s a delicate balancing act and will put pressure on margins. An uptick in Pets’ own online offering wouldn’t go amiss either.

“That said, the roll out of in-store grooming rooms and vet clinics has seen like-for-like sales improve. Costs associated with the vet clinics have risen lately and profitability has been pushed further down the road. A quarter free of cost increases would go down well.”

Hot summer boosts Pennon's water supply business 

Away from the retail sector, water utility Pennon Group plc (LON:PNN) reports its interims.

The group said in a trading update in September that it was on track to meet full-year expectations as revenues at its South West Water business gained, thanks to higher demand and no water restrictions over summer.

But it also said the rise in revenue was expected to be broadly offset by the operational cost of delivery.

South West Water has submitted its business plan to regulator Ofwat for 2020-2025 to ensure it meets requirements for affordable bills and good customer service. The government has been cracking down on utility charges with British Gas owner Centrica warning that a cap on energy bills would hit 2019 earnings.

Meanwhile, Pennon's waste management division, Viridor, has seen a pick-up in recyclate pricing since the end of the last financial year, particularly for paper.

The market will be keen to hear if Pennon is still on course to meet its full-year expectations now that the cold weather has set in as well as any updates on its regulatory business plan for South West Water.

Significant announcements due:

Trading update: Intertek PLC (Q3) (LON:ITRK), Nostrum Oil & Gas PLC (Q3) (LON:NOG)

Interims: Pennon Group plc (LON:PNN), Pets at Home PLC (LON:PET), Quiz Plc (LON:QUIZ), De La Rue plc (LON:DLAR), Cranswick plc (LON:CWK), Amigo Holdings PLC (Q2) (LON:AMGO), GB Group PLC (LON:GBG), Severfield PLC (LON:SFR), VP Plc (LON:VP.), IG Design Group Plc (LON:IGR), Victoria PLC (LON:VCP)

Finals: Tops Tiles PLC (LON:TPT), Gooch & Housego PLC (LON:GHH), Renewi Holdings PLC (LON:RNWH), Treat PLC (LON:TET), Shaftesbury PLC (LON:SHB), UDG Healthcare PLC (LON:UDG)

AGMs: Allergy Therapeutics PLC (LON:AGY), Scotgold Resources limited (LON:SGZ)

Economic data: CBI UK distributive trades survey; US house price index

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