Will Next spring a surprise in Wednesday’s first-quarter trading update?

There’s a lot for investors to get their teeth into on Wednesday, with Sainsbury’s, GSK and Persimmon among the slew of companies reporting alongside Next

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February's milder weather is tipped to boost Next’s first-quarter sales

FTSE 100-listed clothing retailer Next PLC (LON:NXT) will kick off May with a first quarter trading update on Wednesday.

Given that its shares have recovered strongly since a slump at the end of 2018, comfortably outperforming the market, shareholders will be watching to see if the group still expects its full-year profits to drop to £715mln.

While Next said in January that it expected high street trading to remain challenging, there have been some more positive indicators for retail sales since then.

Investors will also be expecting a strong number for the company’s online business, which has been growing in recent years.

Simon Wolfson, Next’s chief executive, may also provide a dash of pro-Brexit comment as one of the few executives to have been more upbeat about the impact of the UK’s exit on the business.

Plan B eyed at Sainsbury’s

Staying on the high street, J Sainsbury PLC (LON:SBRY) is to report its full year results in the wake of the supermarket group abandoning its plans to merge with Asda after the UK competition regulator rejected the deal.

The aftermath of the failed deal is likely to overshadow the results with investors more interested in Sainsbury’s next steps.

Analysts at Jefferies expect Sainsbury’s to post a 1.5% fall in like-for-like (LFL) sales, excluding fuel, for the fourth quarter after a 1.1% decline in the third quarter.

The underlying -1.1% LFL decline reflects much weaker grocery sales (-0.8% total in Q4), offsetting improved general merchandise sales (total +0.5%) and a weather-induced recovery in clothing (at +1.5%),” the analysts said.

“Inevitably, the focus will be on outlook tone for the year ahead, given the extent to which SBRY's sales lag is starting to look well entrenched.”

Glaxo yet to feel full force of Advair competition

Turning to drugs, analysts at Deutsche Bank expect GlaxoSmithKline PLC (LON:GSK) to report “solid” sales and earnings growth when the drug-maker reports its first-quarter results on Wednesday.

The German bank has told clients it expects revenue to grow by around 4% year-on-year, while earnings per share should rise by 5%.

GSK has been managing declines of its once-popular Advair inhaler in recent times, and bosses said in February that the recent launch of a generic version would dent profits by up to £787mln this year.

Deutsche Bank doesn’t expect the impact from Mylan’s cut-price to be too great just yet, given that US regulators only approved it a couple of months ago.

Steadying the ship in recent has been GSK’s portfolio of HIV drugs, and sales of Triumeq, Tivicay and co are expected to rise 8% in the first quarter. Vaccine sales, which include the Shingles treatment Shingrix, are seen climbing 13%.

Subdued volatility to weigh on London Stock Exchange

As part of traditional May Day celebrations, London Stock Exchange Group (LON:LSE) will update on trading for the first-quarter, which has seen subdued market volatility.

March’s full-year results showed revenues and underlying profits grew last year even though company flotation numbers fell 10% and fundraisings by 35%, though there was a surge in new exchange-traded funds amid as part of the trend towards passive investments.

For 2019, LSE said it did not expect to keep to its medium-term target of underlying profit margins of around 55% due to continued investment in the business.

For the first quarter, Deutsche Bank expects 5% growth in income due to the group’s LCH clearing arm and Information Services and helped by currency tailwinds. Nevertheless, DB analysts cut their earnings per share forecast 2% for this and the next couple of years as they expect lower revenues.

Significant events expected on Wednesday May 1:

Federal Reserve interest rate decision

Trading update: Next PLC (LON:NXT), GlaxoSmithKline PLC (LON:Q1), London Stock Exchange PLC (LON:LSE), Persimmon PLC (LON:PSN), Inmarsat Plc (Q1) (LON:ISAT), IWG PLC (LON:IWG), Rank Group PLC (LON:RNK)

Finals: J Sainsbury PLC (LON:SBRY), Circassia Pharmaceuticals PLC (LON:CIR)

Interims: Avon Rubber PLC (LON:AVON), Connect Group PLC (LON:CNCT)

Economic data: UK manufacturing PMI; US ADP employment; US ISM manufacturing; US construction spending; US manufacturing PMI

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