The slew of post-Christmas retailer updates continues on Thursday, with Tesco PLC (LON:TSCO), Marks & Spencer Group PLC (LON:MKS) and Debenhams PLC (LON:DEB) all due.
Let’s start with the latter, Debenhams, which had a rough 2018 and experts don’t expect things to have changed much, if at all, over the key Christmas trading period.
The troubled department store chain hasn’t updated investors since October, when it said it would close up to 50 of its underperforming stores after posting a record full-year loss of nearly £500mln.
We already know from its competitors that November was a terrible month for retailers while AJ Bell investment director Russ Mould expects December was likely a struggle as well.
He said pictures on social media of the retailer’s messy shelves and the usual widespread discounts on goods over the Christmas trading period suggest Debenhams “continues to be stuck in a rut”.
In Thursday’s update, investors will be looking for an update on the restructuring plans and guidance for 2019 as Brexit looms.
Little festive cheer for M&S
There is also likely to be little festive cheer for Marks & Spencer in its Christmas trading statement.
The retailer has long been struggling with flogging its clothes, which are aimed at the older generation not known for regularly revamping their wardrobe.
M&S has tried to change that image by bringing on Holly Willoughby as one of its brand ambassadors and its association with Gareth Southgate and the England football team didn’t do it any harm in the summer.
But sales have still been sluggish: UBS is forecasting a 1.5% drop in like-for-like clothing and home sales in the third quarter and its analysts think the Black Friday effect will likely have dented margins, too.
More worrying for M&S is that those issues seem to have spread to the food division, which had previously proved resilient.
Like-for-like food sales fell 2.9% in the first half of its year and UBS expects to see this trend worsen in the latest quarter.
Tesco to surprise on the upside?
As for Tesco, its shareholders are in a bit of a limbo as they wait for the grocery giant’s announcement.
Analysts reckon the UK’s largest food retailer has the potential to surprise the market, but Wm Morrison Supermarkets PLC (LON:MRW) and J Sainsbury plc’s (LON:SBRY) results won’t have filled investors with confidence.
Sainsbury’s indirectly pointed the finger at Aldi and Lidl for its Christmas sales slump, while Morrisons warned of a “change in consumer behaviour”, claiming that shoppers are seeking out bargains like never before.
Analysts always thought the German discounters would boost their market share over the holidays as cash-strapped consumers tighten their purse strings amid falling real-terms wages and Brexit uncertainty.
Tesco is widely expected to acknowledge Aldi and Lidl’s growing threat on Thursday, but the City thinks it could surprise on the upside with its numbers. At the least, they expect Tesco to be the top performer out of the ‘Big Four’, with sales growth of 1.5%.
Significant events expected on Thursday 10 January:
Trading update: Tesco PLC (LON:TSCO), Marks & Spencer PLC (LON:MKS), Debenhams PLC (AGM) (LON:DEB), DFS Furniture Plc (LON:DFS), Card Factory PLC (LON:CARD), Premier Oil PLC (LON:PMO), InnovaDerma PLC (LON:IDP)
Ex-dividends will knock 6.6 points off FTSE 100 index: GlaxoSmithKline PLC (LON:GSK), BHP Group PLC (LON:BHP)