The biggest news for Wednesday’s corporate calendar will be full-year results from Marks & Spencer Group PLC (LON:MKS) after the retailer took steps late last month to strengthen its balance sheet as it expects clothing sales to struggle for the remainder of 2020 as the coronavirus pandemic bites.
A 3% rise in food sales for the fourth quarter is forecast by analysts at UBS, but that will be more than offset by a 10% collapse in Clothing & Home, they think, producing full-year profit before tax of £410mln.
In the past week, the group launched a massive “rainbow sale” to clear its mountain of unsold spring and summer togs, with everything at least half price and 10% of proceeds going to charity, which will spell bad news for profit margins.
While the food business has remained open it hasn’t seen the same uplifts as other grocers due to its city centre, railway station and airport locations, said analyst Sophie Lund-Yates at Hargreaves Lansdown.
“But investors should remember these are full-year results, so it’s important to pay attention to underlying trends before coronavirus too. Food had made some good headway, and we’ll find out if this was still the case before the lockdown disruption hit,” she said.
Having ditched the dividend for this year and next year, M&S said it was taking “very significant” measures to reduce costs, meaning there are likely to be alterations to its previous transformation plans.
“For now M&S’ focus will be on survival, rather than improvement,” said Lund-Yates.
Experian to break the silence
Experian PLC (LON:EXPN) is releasing its finals on Wednesday following solid interims in November, but “it is safe to say times have changed from now”, the Share Centre pointed out in a preview.
Investors have yet to hear on how the data analytics firm is navigating through the coronavirus crisis, though they might be confident thanks to solid revenue growth, strong cash-flows, margins and better diversification after Experian reduced its reliance on banks.
Last time shareholders heard any news was January when the firm confirmed full-year guidance after sales grew in the third quarter even though revenues fell in the UK and Asia.
Vistry restarts
Vistry Group PLC (LON:VTY) should give a statement alongside its annual shareholder meeting on Wednesday having already announced that that it was restarting work on most of its building sites at the end of last month.
The FTSE 250 group, formerly known as Bovis Homes, said then that since the UK coronavirus lockdown came into force it had received 80 cancellations and completed 193 private sales.
Vistry’s share price has fallen by more than 45% since the start of the year, more than almost of all its peers, which analysts at Peel Hunt put down to concerns about its liquidity position.
Updates on sales volumes and house prices, especially with the housing market having been officially “restarted” by the government now, will be of interest.
So far, other major housebuilders haven’t been reporting weaker prices for new homes although sales volumes have fallen, but it’s still unclear how both will move in coming months as the country has moved into a coronavirus-triggered recession.
Inflation in focus
Meanwhile, on the macro front investors will be closely eyeing the UK’s inflation figures.
“Oil fell further in April so that could weigh on the headline figure but it will be interesting to see how the [inflation] numbers work out, given the depressed overall level of economic activity and the reduced level of transactions upon which to base the figures, although food buying could have conceivably had an upward effect,” according to analysts at AJ Bell.
“If there is any good news here, is it that wage growth was running well ahead of inflation, even if had been cooling for a while. Those lucky enough to keep their jobs will therefore have been better off in real terms and be potentially better placed to spend a little more when they are finally allowed to leave their homes and roam a little more freely than they are at the moment”, they added.
Significant announcements expected for Wednesday May 20:
Finals: Marks and Spencer Group PLC (LON:MKS), Severn Trent PLC (LON:SVT), Bloomsbury Publishing PLC (LON:BMY), Experian PLC (LON:EXPN), Great Portland Estates PLC (LON:GPOR), HICL Infrastructure PLC (LON:HICL)
Trading announcements: Vistry Group PLC (LON:VTY), Coats Group PLC (LON:COA)
Economic data: UK inflation, UK PPI, US Fed minutes