Next Friday sees two well-known names from the UK retail sector dominate proceedings: Tesco PLC (LSE:TSCO) and Halfords Group PLC (LSE:HFD).
The first-quarter trading update from Tesco will coincide with the supermarket chain’s annual general meeting and is expected to demonstrate continued strong momentum.
Analysts at Barclays said headline year-on-year growth figures will need to be carefully understood in the context of comparatives from last that vary sharply by segment.
They predict a 1.8% decline in like-for-like sales for the group, albeit this would represent a gain of about 7.3% on pre-Covid levels.
Tesco's Booker cash and carry division is tipped to report a 12.4% increase in like-for-like sales by Barclays.
With Tesco only having provided full-year guidance in mid-April of £2.4bn-£2.6bn retail earnings (EBIT) – the analysts were “doubtful that there will be any change in the outlook at this stage”.
Meanwhile, Halfords saw its bikes business enjoy a boost in the lockdown but there have been signs of this shifting down a few gears, which was back in January when we last heard from the bike and car parts peddler.
As such, said analyst Susannah Streeter of Hargreaves Lansdown, investors “will want to see signs of motoring sales at Halfords continue to peddle more quickly”.
The pandemic cycling boom appears to be "fading fast", she added, as people have had less time for the great outdoors.
"This trend is likely to continue as people appear to have been ring-fencing budgets to spend time on longed for foreign shores rather than domestic hills,” she suggested.
However, analysts at RBC Capital Markets suggested that if oil prices continue to remain high, consumers might cycle more and use their cars less.
However, that requires Halfords to maintain a healthy stock level given supply chain issues and the shortage of some key components.
The analysts also said the group’s garages should benefit from the fact that there are more older cars on the road, amidst chip shortages and cost-of-living crisis which are expected to mean fewer new cars are bought by consumers.
Also next week there will be retail results from Boohoo, WH Smith and, possibly, JD Sports Fashion, which will fill out the cost of living picture further.
Even with inflationary pressures, Peel Hunt analysts expect Boohoo to benefit from consumers “rebuilding their wardrobes”, evidenced by a strong switch back to formalwear and socialising and holidays, even with inflationary pressures.
However, a near 80% drop in its share price over the past year tells you all need to know about current expectations for the owner of the Nasty Gal, Karen Millen and Burton Brands.
Now a favourite for short-sellers, the online fashion retailer has already flagged first-quarter sales will be down compared to strong sales a year ago, with Peel Hunt predicting a fall of 9%.