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Boohoo, ITV, Next and British Airways to dominate the diary for shortened week; BoE and US non-farms eyed

Other firms in the post-Bank Holiday calendar include housebuilder Barratt, ticket platform Trainline and Holiday Inn owner IHG

Boohoo Group PLC - Boohoo, ITV, Next and British Airways to dominate the diary for shortened week; BoE and US non-farms eyed

The shorter week following the Bank Holiday will still manage to cram in announcements firm a number of London’s big hitters across the retail, travel and media spaces.

Meanwhile, there will also be some macro news for investors to keep an eye on as the Bank of England makes its latest decision on interest rates, while the end of the week will bring the all-important US non-farm payroll data.

Boohoo hopes for tears of joy after bumper year

Wednesday will see final results from online fashion chain Boohoo Group PLC (LON:BOO), capping off what has been a boom year for the firm as the pandemic and lockdown forced shoppers to opt for its online offering as high street clothing outlets shuttered.

However, the firm has not had a perfectly smooth ride over the last 12 months after being forced to battle a supply chain scandal relating to working conditions at its factories in Leicester. While the issue appears not to have put off consumers, the company will likely be making a big deal out of its governance overhaul and efforts to make sure similar issues don’t crop up in the future.

With this in mind, investors are likely to keep an eye on any updates from boohoo’s ongoing supply chain review as well as what the UK’s third lockdown did for sales at the start of the year.

The outlook will also be crucial as lockdown eases and the firm faces the challenge of integrating the remnants of the collapsed Arcadia empire and as well as Debenham’s into its offering.

Investors turn over to ITV

A trading statement from ITV PLC (LON:ITV) on Wednesday may well be the only media release this month not to mention “Line of Duty”, the hit series from the BBC.

The focus will be on advertising growth, with Barclays estimating that over the whole year the broadcaster should see revenues rise by 8% from a year earlier.

In its results for 2020, ITV reported that total external revenue was down 16% at £2.7bn, with ITV Studios down 25% because of disruption in production and broadcast down 8%, with pre-tax profits shrinking by more than a third to £325mln.

Next up

Next PLC (LON:NXT) has a habit of under-promising and over-delivering, so Thursday’s trading update may be a case of “rear view: good, forward view: cloudy”.

“NEXT PLC's online strengths have seen it beat expectations time after time through the pandemic. Can it repeat the trick once more, now that it is competing against a reopened High Street?” wonders Steve Clayton at Hargreaves Lansdown.

“Investors will be looking to see how much trade has been pulled back into the group's stores and away from the online operations. One thing’s for sure though, pretty much every retailer on the High Street would like to be positioned where NEXT is,” Clayton asserted.

Barratt to build on surging house prices

Barratt Developments PLC (LON:BDEV) is the next FTSE 100 housebuilder on the rank after peer Persimmon provided an update in the past week.

Shares in Leicestershire-based builder are up by more than 40% over the past 12 months, not far off the all-time highs reached pre-coronavirus.

The third-quarter update from Barratt comes amid surging house prices and off the back of record sales in the first half of the company’s financial year.

Back in February Barratt restore dividend payments and chief executive David Thomas said housing completions of 15,500 units were expected for the year to June 2021, compared to just over 12,600 last time.

Analysts at UBS suggested Thomas could nudge sales guidance higher, especially if the sales rate increases from 0.77 per site per week to nearer 0.80.

Investors will also be looking at forward sales and net cash, which were £3.4bn and £1.1bn as of December, before the payment of the dividend.

Trainline numbers likely to hit the buffers

Final results from rail ticket seller Trainline PLC (LON:TRN) on Thursday are unlikely to make for happy reading, as lockdown measures and stay at home orders during the pandemic saw passenger numbers collapse for the best part of the entire year.

While the easing of lockdown measures is likely to have improved the outlook somewhat, the most recent shutdown in early 2021 is unlikely to have helped the company’s current situation, with new boss Jody Ford facing a difficult path forward as the rise of home working and lingering fears over COVID-19 mean passenger numbers may never recover to their pre-pandemic levels.

In January, the company issued £150mln in bonds to shore up its balance sheet, however, investors will be keen to know how the group plans to use the cash, as well as its view on how the sector will fare across the rest of the year.

BA owner IAG to remain grounded

British Airways owner International Consolidated Airlines Group SA (LON:ISA) is still waiting on the cavalry to arrive and save its skin.

The European Commission confirmed that the EU’s members will unconditionally accept any holidaymakers or business travellers if they have received coronavirus vaccines that have been approved by the European Medicines Agency, which has lifted sentiment towards the embattled airline but comes too late to have any effect on the company’s first-quarter results, due out on Friday.

In late February, the company posted losses of nearly €8bn in respect of 2020 as COVID-19 restrictions cut passenger revenues by 75%.

For the first quarter of 2021, IAG said it expected to be running at 20% of 2019 passenger capacity but given the continued uncertainty that might not have been achieved.

The one bright spot last year was cargo where revenues during the year rose by €200mln to €1.3bn, and that might be the one bright spot this time around as well.

Intercontinental Hotels checks in with trading update

Holiday Inn owner Intercontinental Hotels Group PLC (LON:IHG) will be a late entry to the diary with a first-quarter trading update on Friday.

Due to its franchise structure, the firm has been one of the few in the industry to continue delivering underlying profit during the pandemic, although not much is expected to have changed since the last update given most nations still have travel restrictions in place.

One potential bright spot may be internal demand from domestic travel, especially in the US, as well as growth from the Chinese market a year on from the country’s first pandemic shutdown.

Investors will also be interested in the company’s expansion plans, as well as how it hopes to bounce back once more lockdown restrictions begin to be eased further and international travel returns.

Macro matters

The two big macro matters for the coming week are the Bank of England’s monetary policy committee meeting and the US jobs report.

But the biggest event of all isn’t economic, it’s political, as market analyst Marshall Gittler at BDSwiss says, with Thursday’s local UK elections in England, Wales and Scotland, with big implications for the pound if Scotland takes another step toward independence. Friday and Saturday will be when the results emerge.

While economists do not anticipate the BoE’s MPC will make any changes to interest rates or its level of asset purchases (quantitative easing/QE).

However, the UK’s improving economic outlook is likely to lead to some forecast upgrades and may also see the BoE follow its Canadian counterpart and begin some tapering of the central bank’s QE activity.

The bank is widely expected to bump up its GDP projections and trim its unemployment estimates.

Some economists, such as the EY ITEM Club, believe the BoE is unlikely to make any policy changes in 2021, but with the more upbeat UK economic outlook and inflation showing signs of stirring, others expect some action from the BoE on Thursday.

“This meeting could be the moment where the committee decides to taper the pace of its bond purchases,” said ING.

“Admittedly this should come as no real surprise. We know the BoE still has circa £110bn worth of gilt purchases to make this year when you wrap in redemptions. And at the current £4.4bn weekly pace, the BoE will hit its target level of £875bn (gilts) months before the end of the year, when it has signalled it will stop actively expanding holdings. It has already explicitly said tapering is likely.”

As for actual tightening, ING note that markets have gone from pricing in zero hikes at the February meeting, to now foreseeing two hikes over three years.

The BoE has said it is reviewing its guidance on the future of its balance sheet.

As for US jobs, April’s non-farm payrolls will be reported on Friday, with economists expecting the previous month’s forecast-busting 916k new jobs to be topped with a reading of around 925k.

“America’s vaccination programme and easing of local lockdowns will be helping here and economists will be looking for another strong number as evidence that the world’s largest economy is getting back on track,” said analysts at AJ Bell.

“Observers will also look for any revisions to the estimates for the prior two months... Upward revisions tend to occur when the US economy is gaining traction and the opposite when it is losing it.”

The question the market will be asking is, added Gittler, is whether another 900k-plus jobs number qualify as “substantial further progress” according to the Federal Reserve, as the central bank chair Jerome Powell said recently it would take “a string of months” of numbers like that to qualify for the sort of improvement that would nudge policymakers out of their repose.

Significant announcements expected for week ending 7 May:

Monday May 3:

UK Bank Holiday

Economic data: US manufacturing PMI

Tuesday May 4:

Economic data:  UK manufacturing PMI, US trade balance

Wednesday May 5:

Trading announcements: ITV PLC (LON:ITV), Direct Line Insurance Group PLC (LON:DLG), Hiscox Ltd (LON:HSX), OSB Group PLC (LON:OSB), RHI Magnesita NV (LON:RHIM)

Finals: Boohoo Group PLC (LON:BOO)

Interims: Virgin Money UK PLC (LON:VMUK), Smiths News PLC (LON:SNWS), Cambria Automobiles PLC (LON:CAMB)

Economic data: US Services PMI

Thursday May 6:

Trading announcements: Next PLC (LON:NXT), Barratt Developments PLC (LON:BDEV), Derwent London PLC (LON:DLN), Equiniti Group PLC (LON:EQN), Hansard Global PLC (LON:HSD), Mondi PLC (LON:MNDI), Rathbone Bros PLC (LON:RAT)

Finals: Trainline PLC (LON:TRN)

FTSE 100 ex-dividends to knock 6.84 points off the index: Reckitt Benckiser Group PLC (LON:RKT), Croda International PLC (LON:CRDA), Polymetal International PLC (LON:POLY), Admiral Group PLC (LON:ADM), BP PLC (LON:BP.)

Economic data: Bank of England rates decision, UK services PMI, US jobless claims

Friday May 7:

Trading announcements: International Consolidated Airlines Group SA (LON:IAG), InterContinental Hotels Group PLC (LON:IHG)

Interims: Numis Corporation PLC (LON:NUM)

Economic data: UK construction PMI, US non-farm payrolls

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