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Boohoo to take spotlight in coming week alongside Greggs, Ferguson and Reach as macro focus turns to US payroll data

Also scheduled for updates and results in the days ahead are Hotel Chocolat, catering firm Compass and medical instrument maker Halma

Reach PLC - Boohoo to take spotlight in coming week alongside Greggs, Ferguson and Reach as macro focus turns to US payroll data

The coming week will see several prominent names on the corporate calendar, including bakery chain Greggs, online fashion giant and AIM behemoth Boohoo and blue-chip plumbing and heating group Ferguson.

On the macro front, most of the attention will be on Friday’s US non-farm payroll data, although UK and US GDP data on Wednesday as well as a smattering of PMIs across the week are also likely to draw scrutiny from the market.

Reach looks to turn a page

The owner of the Daily Mirror and the Daily Express, Reach PLC (LON:RCH), is due to deliver interim results on Monday, covering something of a difficult period for the media sector.

Investors were given a preview of what was to come in a trading update in early July, where the company reported that revenues in its second quarter had fallen 27.5% year-on-year due to declines in circulation and ad spending, although it highlighted that trends had “slightly improved” in June with revenue falling only 23.9% in the month compared to 30.5% in April.

Print media declined by 29.5% in the period while digital revenues were down 14.8%. Reach added that circulation remained “significant below pre-[coronavirus] levels” and that local advertising was “continuing to be challenging”.

With this in mind, investors will likely be focusing on the outlook for the rest of the year and whether the group foresees any impact on its bottom line on the new coronavirus restrictions, which could cut into the cash balances of some advertising groups and thus lead them to turn off the taps for marketing spending.

Another area of interest will be the firm’s cost saving plans, which it expects to deliver £35mln in annualised savings with an estimated one-off cost of £20mln.

The planned changes include the loss of around 550 people, 12% of the company’s workforce, while Reach also said it will invest in improving its digital customer experience across its brands.

Greggs to serve up trading update

Bakery chain Greggs PLC (LON:GRG) will deliver a trading update on Tuesday as the firm joins a number of firms looking to adjust to the new reality that has led to the effective demise of commuters and office workers, a key part of its customer base, who often grab a quick pasty or sausage rolls in between work and home.

This hole in its existing business means the firm will likely have to step up is marketing efforts, however recent initiatives such as offering 10,000 free sausage rolls to university students have shown that the group may still have some advertising tricks up its sleeve.

While the company had something of an ugly first half, swinging to a £62.2mln operating loss from a £39.9mln profit last year due to its outlets being closed for most of the period due to the UK’s lockdown, its sales rebounded strongly following its reopening in July which could bode well for the numbers in this coming update for the third quarter.

However, the latest restrictions once again encouraging people to work from home could put a brake on this recovery, and investors are therefore likely to look for any news on how the firm will handle what is shaping up to be a difficult winter.

One saving grace could be the digital front, where Greggs has begun to roll out a click and collect service while deliveries of its products can also be ordered on the Just Eat app in multiple cities.

With the group needed at least 80% of 2019’s sales to break even, shareholders will want to see fast action otherwise their enthusiasm for the stock could cool quickly.

Hotel Chocolat in for a sweet set of finals

Hotel Chocolat Group PLC (LON:HOTC) is releasing its finals on Tuesday, which shouldn’t come as a surprise considering the guidance issued in July.

The chocolatier expected revenue to rise 3% to £136mln in the year to June 28 despite the widespread closures.

While the firm benefitted from its digital sales and the subscriptions and recurring purchases, investors will wonder if the positive momentum is set to carry through the winter.

The market is also curious to know how operations in the US and Japan are doing and if they have been impacted further by the pandemic.

Boohoo’s on the catwalk again

Boohoo Group PLC’s (LON:BOO) interims on Wednesday come just days after the fast fashion giant vowed to address the governance issues raised by an independent review.

After its online-only business model proved defensive during lockdown, shares took a hit in July from concerns over hits environmental, social and governance (ESG) practices, amid allegations over the use of sweated labour.

AJ Bell noted the questions raised by the allegations of poor pay and working conditions return to the core question of how Boohoo can make gross margins of 54% and operating margins of 8.7% (on an underlying basis) when its average selling prices are so competitive.

Investors will be interested in any further updates on that as well as sales growth in the second quarter after that 45% surge in the first quarter, to see whether the bad press deterred customers.

The market is also looking for trends in gross margin, which came to 54% in the fiscal year to February 2020, a slight drop on the year before, as well as trends in the adjusted operating margin, which fell very marginally to 8.7% in the year to February 2020.

Shareholders will also want to hear on plans for the AIM giant’s latest acquisitions, Oasis and Warehouse, and how they sit between the higher-end Karen Millen and Coast brands and the more fashion-forward boohoo, PLT and NastyGal.

Is Compass bracing for the winter?

Compass Group PLC (LON:CPG) is releasing a trading update on Wednesday which could bring the tone down again following renewed restrictions around the world.

The caterer had reopened 60% of its business by the end of June, from 55% in May, with sales down 44% in the third quarter.

Investors are wondering whether the FTSE 100 foodservice business can get back to prior peak sales and margins and whether future growth rates resemble prior 4-6% per annum.

Barclays believes this is possible, thanks to costs and contracts sufficiently flexible to recover margins even if volumes remain permanently impaired as well as the potential to gain share from smaller and weaker competitors.

In the short-term, the stock remains subject to COVID-19 fluctuations and a potential tough winter ahead.

Ferguson eyed for return of dividend

Plumbing and heating specialist Ferguson PLC (LON:FERG) is set to deliver its final results on Tuesday, with some analysts expecting the firm to re-join the list of dividend-paying FTSE 100 firms with a second half payout after cancelling its interim divi in April.

The expectation is that the payment will match last year’s figure of around 112p per share, making Ferguson the tenth blue-chip firm to resume payments following the volatility caused by the initial stages of the coronavirus pandemic earlier this year.

Shareholders are also likely to be on the lookout for any news on the plan for the firm to demerge its UK operation, leaving it solely focused on its North American businesses in the US and Canada, as well as its proposed secondary listing of shares on the US markets.

“The firm already reports in dollars, CEO Kevin Murphy and his team are already based Stateside and the comparable peer group in America trade at higher valuations than their British counterparts, so the theory is that this would give Ferguson’s valuation and share price a potential boost”, said AJ Bell investment director Russ Mould.

The planned shift to the US, from which the group derives around 90% of revenues, also seems to have supported the shares following their initial slide, with the stock now back to around their all-time peak following a plunge in late February.

Halma to see record profits run coming to an end

Sensor and control manufacturer Halma PLC (LON:HLMA) will report its first half results on Wednesday, which could show some revenue resilience, although the profit trend remains lower.

On September 23 - when the group revealed that its chairman, Paul Walker, will step down from the board by next July after eight years in the role - Halma said its negative revenue trends have improved in the past few months.

Having already reported a 13% decline in sales in the first quarter, the manufacturer of lift door sensors, medical instruments and other banal but important devices said “revenue trends have gradually improved” since.

The FTSE 100-listed delivered a 17th consecutive year of record profits in the full-year to the end of March, 2020, with organic sales up some 5%, but the coronavirus pandemic looks to be bringing that run to an end.

Nicholas Hyett, equity analyst, Hargreaves Lansdown noted: “While coronavirus has inevitably had a knock-on effect since sales only dipped 4% in the first quarter of the new financial year. If that was replicated at the half year that would be a pretty impressive result all things considered.

“Nonetheless the group expects a 5-10% fall in profits in 2021 - not that you'd know its record breaking run is set to come to an end from the share price. At 40.2 times earnings, the PE ratio is close to the highest it’s ever been.

“That's a real health warning in the current market, and makes putting together a positive investment case for the business a challenge – despite its exceptionally high quality. We think Halma will struggle to change that assessment”.

US jobs data will be main macro focus

As it will be the start of a new month in the coming week, all the data release schedules will be reset, led as always by the latest global purchasing managers indexes, and then on the first Friday of the new month the latest US jobs report.

Russ Mould, investment director at AJ Bell noted that the good news is that the number of weekly unemployment claims in the US is well below the spring peak of 6.9 million, while the rate of improvement appears to be stalling, with the number of new claims getting stuck at just under the 900,000 mark.

He said: “That is prompting some economist to argue the US labour market and US economy are stalling a bit, perhaps as a result of fresh local COVID flare-ups and lockdowns, so the new non-farm payrolls number should be interesting.

“In April, the US recorded the loss of 20.8 million jobs and it has clawed back 10.6 million in the next four months, although again the pace of recovery has been slowing, with August’s initial reading coming in at 1.37 million new jobs”.

Mould pointed out that the current US unemployment official headline rate is 8.4%, down from April’s high of 14.7%, but the U6 rate is gathering increased amounts of attention: this covers not just unemployed workers but those who are working part-time when they would like a full-time job (and thus underemployed) as well as so-called discouraged workers, who have ceased to look for a post.

“The last U6 number was 14.2% and this may be a better indication of how many Americans are on the breadline and struggling to make ends meet,” he concluded.

Significant announcements expected for week ending 2 October:

Monday 28 September: 

Finals: Ceres Power Holdings PLC (LON:CWR), Morses Club PLC (LON:MCL)

Interims: Reach PLC (LON:RCH), Crossword Cybersecurity PLC (LON:CCS), Avacta Group PLC (LON:AVCT), Chesnara PLC (LON:CSN), Instem PLC (LON:INS)

Tuesday 29 September:

Trading announcements: Greggs PLC (LON:GRG), Grainger PLC (LON:GRI)

Finals: Hotel Chocolat Group PLC (LON:HOTC), Ferguson PLC (LON:FERG), Blancco Technology Group PLC (LON:BLTG), Gateley Holdings PLC (LON:GTLY), ScS Group PLC (LON:SCS)

Interims: AA PLC (LON:AA.), Card Factory PLC (LON:CARD), Cairn Energy PLC (LON:CNE), ADM Energy PLC (LON:ADME), Alfa Financial Software Holdings PLC (LON:ALFA), Animalcare Group PLC (LON:ANCR), Fireangel Safety Technology Group PLC (LON:FA.), Invinity Energy Systems PLC (LON:IES), John Menzies PLC (LON:MNZS), Mereo BioPharma Group PLC (LON:MPH), Mortgage Advice Bureau Holdings PLC (LON:MAB1), Osirium Technologies PLC (LON:OSI), XLMedia PLC (LON:XLM)

Economic data: UK mortgage lending, US consumer confidence

Wednesday 30 September:

Trading announcements: Compass Group PLC (LON:CPG), 3i Infrastructure PLC (LON:3IN), Topps Tiles PLC (LON:TPT)

Finals: Innovaderma PLC (LON:IDP), Itaconix PLC (LON:ITX), Premier African Minerals Limited (LON:PREM), Avingtrans PLC (LON:AVG), Bezant Resources PLC (LON:BZT), Bion PLC (LON:BION),

Interims: Boohoo Group PLC (LON:BOO), 888 Holdings PLC (LON:888), Halma PLC (LON:HLMA), Sensyne Health PLC (LON:SENS), Minds + Machines Group Ltd (LON:MMX), OptiBiotix Health PLC (LON:OPTI), S&U PLC (LON:SUS), 1Spatial PLC (LON:SPA), Bushveld Minerals Limited (LON:BMN), Distribution Finance Capital Holdings PLC (LON:DFCH), Getech Group PLC (LON:GTC), Quixant PLC (LON:QXT), Sumo Group PLC (LON:SUMO), Triple Point Social Housing Reit PLC (LON:SOHO), Xaar PLC (LON:XAR), Yu Group PLC (LON:YU.)

Economic data: UK GDP, US GDP, US Chicago PMI

Thursday 1 October:

Interims: Burford Capital Limited (LON:BUR), Lamprell PLC (LON:LAM)

FTSE 100 ex-dividends to knock 4.93 points off the index: British American Tobacco PLC (LON:BATS), Smith & Nephew PLC (LON:SN.)

Economic data: UK manufacturing PMI, US personal income, US jobless claims, US manufacturing PMI

Friday 2 October:

Trading announcements: Wincanton Plc (LON:WIN)

Economic data: US non-farm payrolls, US unemployment, US Michigan consumer sentiment

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