Retail and hotel company updates to shine light on coronavirus lockdown performances

JD Sports Fashion and Halfords will issue full-year results, while Premier Inn owner Whitbread issues a trading update

JD Sports Fashion store

The corporate agenda on Tuesday will be focused on consumer activity over the coronavirus lockdown, with updates from two retail stalwarts -  JD Sports Fashion PLC (LON:JD.) Halfords Group PLC (LON:HFD) – as well as Premier Inn owner Whitbread PLC (LON:WTB).

JD Sports will release its long-delayed results for the year ended January 31, 2020.

The sports fashion retailer is unlikely to cause any upsets with its figures, having said earlier this year that headline pre-tax profit is expected to be “in the upper quartile of current market expectations” at between £403mln-£433mln.

Analysts expect revenue of £5.8bn, broadly around consensus, alongside an update on current trading and on the recent CMA ruling against its already completed Footasylum acquisition.

The sports clothing retailer also recently bought back its camping arm Go Outdoors from administrators, though some analysts don’t expect it to make a stellar return to the high street.

RBC Capital Markets said the FTSE 250-listed firm’s longer-term margin recovery prospects may be compromised by a shift to online shopping, while its usually young customer base may see their spending confidence decrease amid a tough job market.

All eyes on Halfords’ margins

Another big set of finals is expected from bikes to car parts retailer Halfords, which has been one of the busiest stores groups as it was allowed to remain open during lockdown.

The FTSE 250-listed firm has already said that adjusted profit before tax for the year to end-March, 2020, would be at the upper end of the guided range of £50mln-£55mln.

A 23% sales drop in April, which topped the group's revised expectations, is estimated to have improved over the course of the following two months, although experts say investors should focus on margins.

“Sales are only one half of the equation and our real focus at these results will be cost control and cash conservation,” Hargreaves Lansdown analysts said in a preview.

“A large leasehold retail estate and accompanying staff costs mean some costs are unavoidable. But if the group can keep exceptional costs associated with moving to a socially distanced operating set up to a minimum it will have done well,” they added.

Whitbread updates as Premier Inn reopens

Premier Inn owner Whitbread PLC (LON:WTB) will issue a trading update for its first quarter on Tuesday, three days after its hotels reopened their doors following the lockdown relaxation on Saturday.

While the lockdown period is likely expected to see sharp declines, given most of its inns will have been closed, investors are likely to be more interested in the group’s trading outlook amid reports holidaymakers are rushing to get away after months at home, and likely have enough cash saved up to do so.

However, with international and business customers likely to be much less reliable while global travel restrictions remain, the company is unlikely to provide any firm guidance until things return to a more normal state.

Analysts at Jefferies have predicted that Whitbread will be one of the firms to recover fastest from the pandemic downturn, especially given the recent £1bn fundraising in May to shore up its balance sheet amid the pandemic closures.

The analysts expect Whitbread to reach 75% of 2019 occupancy by December and all of it by September 2021, while pricing will be restored by March 2022.

Shareholders may also be looking to see if the group will use the extra cash to target any strategic opportunities in the sector once the core business is back up and running.

Significant announcements expected on Tuesday July 7:

Trading updates: Whitbread PLC (LON:WTB), Reach PLC (LON:RCH), Electrocomponents PLC (LON:ECM), Ferrexpo PLC (LON:FXPO)

Finals: JD Sports Fashion PLC (LON:JD.), Halfords Group PLC (LON:HFD)

Interims: Micro Focus International plc (LON:MCRO), RM Plc (LON:RM.)

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