The coming week will see more major retailers issue trading updates focused on the festive period, with online clothing retailers ASOS and Boohoo among the key names as well as JD Sports and Primark owner Associated British Foods.
Meanwhile, Tesco will also be providing insight into its Christmas trading alongside takeaway app Just Eat and Premier Inn owner Whitbread.
On the macro front, investors will be interested in UK GDP data on Friday as well as inflation, jobless claims and retail sales data from the US on Wednesday, Thursday and Friday respectively.
JD Sports lines up festive trading update
As with many firms, the FTSE 100’s stores have been impacted heavily by the pandemic as lockdown restrictions have forced many non-essential retailers to close their doors for extended periods, so investors will likely be looking for how much the company’s online operation has managed to offset the decline in-store footfall.
Meanwhile, with the onset of the UK’s latest national lockdown the outlook for trading in early 2021 will also be watched closely, as well as any updates on the company’s US operation following its acquisition of sneaker chain Shoe Palace for US$681mln last month.
There may also be interest in any progress on JD’s talks to potentially acquire UK department store chain Debenhams after the company confirmed it was in discussions with the firm’s administrators in early December.
Just Eat delivers trading update
Takeaway delivery app Just Eat Takeaway.com NV (LON:JET) is scheduled to update on its trading on Wednesday, however, investors may be more interested in how the company intends to cash in on the newest UK lockdown.
The company, perhaps best known for its Snoop Dogg-fronted commercials, was one of the main beneficiaries of the previous lockdown in March last year as consumers increasingly relied on delivery firms to keep themselves fed and watered while sheltering at home.
With the latest round of restrictions very closely resembling the first lockdown, this trend is likely to be repeated, particularly following the company’s partnership with fast-food giant McDonald’s and bakery chain Greggs PLC (LON:GRG).
Order growth will likely be the key focus for investors in the update’s figures, as well as any updates on the company’s planned acquisition of US competitor Grubhub which is expected to complete in the first half of this year and will make the company the world's largest online food delivery company outside of China.
Fast-fashion takes the centre stage mid-week
In a retail-rich week, ASOS PLC (LON:ASC) is going to be the first of its fast-fashion peers to issue a trading update, scheduled for Wednesday, with Boohoo Group PLC (LON:BOO) and Associated British Foods PLC (LON:ABF) releasing news on Thursday.
As per usual, companies are reporting on how the crucial Christmas period has gone, but this year’s performance has never “been less relevant to the sector and share price outlook”, according to Peel Hunt.
“With few liquidity concerns, the profit and cash impact of November’s lockdown and Tier 4 restrictions should be bearable for most,” the City broker's analysts noted.
“The key metrics aren’t so much December like-for-like sales, but rather customer relevance and market positioning.”
In this regard, ASOS has been delivering lower growth compared to its peers, a concern echoed by Liberum which stressed inventory skew over last quarter may not have been optimal, due to long lead times in wholesale, which may have resulted in too much occasion-wear relative to casual/loungewear, bringing risk.
Conversely, boohoo has proven hugely popular during the pandemic and it is not expected to slow down in the new year, although its ESG credentials have been put in to discussion after last summer’s supplier scandal and may remain a headache for a while.
Without an online presence, ABF’s clothing retail chain Primark has likely had a tough festive period but its vast range and low prices remain well-loved by customers, with many preferring to wait for shops to reopen rather than turning to other brands, so analysts have not been too worried about the potential for recovery.
However, its profits are expected to take a big dent until lockdown restrictions are lifted. Investors will also expect the food-focused businesses of the FTSE 100 group to provide strength to offset the retail wobbles.
Has the housebuilding market run out of steam?
These updates follow one from rival Barratt Developments in the past week, which said its rate of house sales and building work in progress both slowed from the breakneck speed seen late last summer, though it reported bumper levels of cash.
Taylor Wimpey was one of the most upbeat of the sector back in November, bouncing back from a loss in the first half of the year with new guidance for full-year profits of £292mln for the current year and above £626mln the next.
This was based on higher average selling prices and building capacity returning to normal, helped by solid levels of trading and reservations stretching beyond next March, when the government’s Help to Buy scheme becomes less generous and the stamp duty holiday ends.
Taylor Wimpey previously promised to resume paying its halted dividend at this year’s final results, with cash flow strong enough that a special dividend was being mooted.
Fellow FTSE 100 builder Persimmon, which has been led by new boss Dean Finch since last summer, was a bit vaguer in November, but reported strong trading since the first UK lockdowns were lifted, with a third-quarter sales rate 38% ahead of 2019, though this was down from the 49% reported in August.
But Finch and the board remained resolutely bullish and recommended a second catch-up dividend payment of 40p a share, recouping the previously planned 110p-a-share payment for 2019 in full.
After completing 4,900 homes in the first half, against the previous full-year figure of 15,855, it will be interesting to see what the expectations are for this year.
Analysts are currently forecasting a drop in full-year pre-tax profit to £854mln from just over £1bn in 2019.
Over at Vistry, the FTSE 250-listed builder said it will consider a dividend this year after reporting strong sales and good cash generation in its early December update.
Profits in the year to end December 2020 will be at the top end of its £130mln-£140mln forecast, it said, helped by “strong” trading and low cancellations.
The housebuilder added that all land for building next year has been acquired and it predicted a profit before tax of £310mln for 2021 and to be in a net cash position by the year-end.
Tesco counts its festive receipts
Bradford-based Morrisons reported 8.1% like-for-like (LFL) sales growth over 22 weeks, including 8% over the last three weeks in December, with London-headquartered Sainsbury’s increasing sales 8.6% in the third quarter and 9.3% for the nine weeks preceding Christmas.
For the first half of its financial year to August 29, the Welwyn Garden City-based Tesco increased sales 6.6%, with UK and Ireland LFLs up 7.2%.
Although many Tesco investors are perhaps just hanging around in anticipation of the 51p per share special dividend promised towards the end of next month, many will be interested to see what’s happening with the supermarket giant, which has a 27% UK market share, as it shares are lower than they were a year ago, despite the unusually high sales in 2020 because of the pandemic.
Though the company does not usually publish profit or cash flow figures alongside its Christmas update, it will be important to look at any commentary surrounding full-year profit expectations, said analyst Sophie Lund-Yates at Hargreaves Lansdown.
“Huge costs associated with Covid-19 means Tesco’s half-year profits shrunk, ignoring the benefits of business rate relief. To protect margins, higher costs need to be offset by increased scale. So, we’ll be looking to see just how much sales rose in the third quarter, especially as November saw the re-introduction of tougher restrictions for much of the UK,” she said.
Whitbread faces restless start to 2021
The company has already asked its landlords for a 50% rent holiday over the next three months to help it weather the effects of the pandemic, so investors will likely want news on how these discussions are going when it updates on trading on Thursday.
However, with commercial landlords already facing heavy losses during the pandemic, the outlook looks murky at best.
Whitbread's update may also be eyed for any news of additional job cuts as a result of the prolonged restrictions after saying in September that 6,000 workers could be laid off.
With the company likely to keep burning cash too, having already scrapped its dividend, investors will also be keeping an eye on any plans the company has to tap the market for fresh funds.
“The second week of the month normally has fewer indicators of interest, although this week a number of them sneak in on Friday. The question is, will anyone be interested in them to begin with?” wondered market analyst Marshall Gittler at BDSwiss, noting that there was not much discussion about the statistics this week amid the drama at the US Capitol.
The main data in the UK and the US will be on Friday.
UK short-term indicators include the release of monthly GDP, industrial and manufacturing production, and the trade balance at the end of the week, with economists expecting the steepest monthly decline in output since the sharp global fall in April.
This is likely to be followed by more bad news in coming months as December, January and probably February will show the effect of stricter lockdowns.
The market is more likely to focus on whether the government can get coronavirus infection and deaths down and improve the roll-out of the vaccine, with post-Brexit problems also continuing to make headlines.
The US week finishes with retail sales and industrial production, following the Job Offers and Labor Turnover Survey (JOLTS) report on Tuesday.
Even with three consecutive months of decline though retail sales are expected to be 3.3% above the pre-pandemic level, which Gittler said, “shows how the government’s support has been keeping the economy afloat and what a disaster it would’ve been if they hadn’t renewed the payments”.
Significant announcements expected for week ending January 15:
Monday January 11:
Tuesday January 12:
Trading announcements: Auto Trader Group PLC (LON:AUTO), Nichols PLC (LON:NICL), Ferrexpo PLC (LON:FXPO), Rathbone Bros PLC (LON:RAT), THG Holdings PLC (LON:THG), Vistry Group PLC (LON:VTY), XP Power Ltd (LON:XPP), Robert Walters PLC (LON:RWA)
Wednesday January 13:
Economic data: US inflation
Thursday January 14:
Trading announcements: Tesco PLC (LON:TSCO), Boohoo Group PLC (LON:BOO), Associated British Foods PLC (LON:ABF), Whitbread PLC (LON:WTB), Dunelm Group plc (LON:DNLM), Taylor Wimpey PLC (LON:TW.), Hays PLC (LON:HAS), Ashmore Group PLC (LON:ASHM), Network International Holdings PLC (LON:NETW), John Wood Group PLC (LON:WG.), Halfords Group PLC (LON:HFD), Centrica PLC (LON:CAN)
Economic data: US weekly jobless claims
Friday January 15:
Economic data: UK GDP, UK trade balance, US retail sales, US PPI