The coming week will see major updates from a number of heavy hitters in the grocery, fashion and gambling sectors as the UK’s economy begins to shift into a ‘new normal’ of more relaxed lockdown measures.
There will also be some key data sets on the macro front in the form of the UK’s latest unemployment figures, British GDP and the weekly US jobless figures.
Ocado to report results from lockdown period
Half-year results from online grocer Ocado Group PLC (LON:OCDO) on Tuesday are likely to deliver some positivity after Kantar data last month revealed the company’s grocery sales jumped by 42% in the four weeks to June 14 as shoppers ordered online more during the lockdown period.
Investors will be hoping the financials will reflect this surge in online delivery demand and will also be looking for any details on how Ocado plans to spend the £1bn of new cash raised in an equity placing and convertible loan note last month.
With the pandemic having hit some retailers hard, Ocado may be spying opportunities to snap up weaker competitors or potentially expand its market share with more delivery partnerships.
Shareholders will also be keeping an eye on the firm’s expectations for the rest of the year, particularly as the relaxation of lockdown measures means people are less likely to be ordering as much shopping as restaurants and shops reopen again.
Halma eyed for dividend news
Analysts are predicting the group will pay out around 16.7p per share, a 6% increase on the prior year and the company’s forty-first consecutive rise of over 5%.
While the coronavirus has hit many companies, Halma’s products are often a required investment for many meaning its business flows and customer base is likely to remain relatively stable despite the pandemic, which in turn can give it leverage over pricing and help juice margins, boost cash flow and keep its dividend going.
In an update in April the company said it expects its adjusted pre-tax profit for the year ended March 31 2020 to be in a range of £265mln to £270mln with revenues of around £1.33bn and year-end net debt of about £320mln.
GVC hopes for quick recovery out the gate as bookies reopen
With betting shops reopening their doors and professional sport returning, recovery will likely be the key word when Ladbrokes owner GVC Holdings PLC (LON:GVC) delivers a half year update on Thursday.
While the first half figures are expected to show declines given it overlapped with the lockdown period, investors will be keen to see how quickly demand has bounced back, as well as where the bookies will lie in the consumer spending tables amid rising unemployment.
Another area of interest will be how much the company’s online games such as Foxy Bingo have contributed to revenues in the period as gamblers search for online and non-sports alternatives to betting. Any uptick will also be eyed to see how much it has offset declines elsewhere in the business.
Burberry may keep slipping on the catwalk
As per the last update in May, half of its stores were still closed but that may have changed as lockdown restrictions have been gradually lifted around the world.
The raincoat designer said online sales picked up strongly with a strong response to its most recent collections, while cumulative sales in mainland China and Korea were ahead of the prior year.
However, profits for the year to March 28 tumbled due to a £245mln stock and stores writedown amid disruption in key Asian markets, pushing profits down 62%.
The luxury group has also been suffering tensions in Hong Kong which are far from being resolved.
“At times of economic strife, luxury spending by the mass affluent is likely to be something to be given up and the unrest in Hong Kong flaring up again, these factors lead to us be on the whole fairly cautious about investing in Burberry,” Helal Miah, analyst at The Share Centre, commented on the preliminary results.
ASOS back on the shelves
The retailer saw sales tanking at the start of lockdowns as customers prioritised spending elsewhere, but noted a slow pickup in demand thanks to promotional activity.
Several City analysts see the upside in the online-only model, although the economic crisis may dampen growth.
The macro news for the coming week will include some major data sets from the UK in the form of gross domestic product (GDP) on Tuesday, inflation readings on Wednesday and unemployment figures on Thursday.
The unemployment and inflation data will provide further insight into how the lockdown has affected the British economy, covering the months of May ad June respectively, while the batch of data may also provide some indications of what the trend may be for the coming months amid a steady flow of reports of large layoffs from firms across the economy.
In the three months to April UK unemployment was 3.9%, however, this did not take into account the 9mln people that are currently estimated to be on the furlough scheme, meaning there is a potential for a spike in jobless rates when the support is wound down in October.
Meanwhile, inflation remains very low at 0.5% in May, and while wage rises are staying ahead of this there are concerns that rising oil prices could increase costs at the pumps and squeeze consumers that are already struggling, potentially causing knock-on effects for retailers and leisure firms as they attempt to recover from the effects of lockdown.
UK consumer data due at the end of the week may also provide some clarity on how consumers are feeling and whether the recent measures announced by Chancellor of the Exchequer Rishi Sunak will be enough to entice spenders to open their wallets again.
Meanwhile, data from across the Atlantic in the week will include US inflation figures on Tuesday as well as retail sales and jobless claims data on Thursday.
There will also be news from the continent as the European Central Bank meets to make its latest decision on interest rates for the eurozone.
Significant announcements expected for week ending 17 July:
Monday 13 July:
Finals: Rua Life Sciences PLC (LON:RUA)
Tuesday 14 July:
Economic data: UK GDP, UK production, US inflation
Wednesday 15 July:
Finals: Dixons Carphone PLC (LON:DC.)
Economic data: UK inflation, US production
Thursday 16 July:
Finals: Invinity Energy Systems PLC (LON:IES)
Economic data: UK unemployment, UK earnings, US retail sales, US jobless claims, ECB interest rate decision
Friday 17 July:
Economic data: UK consumer confidence