Holly Williams and Ravender Sembhy, PA
Britain’s retail heavyweights will reveal their Christmas trading figures this week amid mixed signs on the high street.
Tesco and Marks & Spencer are among a bevy of retailers to report to the market following a strong showing from Next and a profit warning from struggling Debenhams.
The supermarket giant, which has been undergoing a turnaround under chief executive Dave Lewis, is expected to continue along the road to recovery by posting strong sales figures.
Analysts at UBS are forecasting a 2.4% increase in like-for-like sales over both the Christmas period and the third quarter as a whole.
Tesco is experiencing strong momentum relative to its peers and in October Mr Lewis hailed a “significant milestone” after unveiling the first dividend payout for three years following a surge in half-year profits and sales.
The group posted a better-than-expected 27% rise in group underlying earnings to £759m for the six months to August 26 after it notched up its seventh quarter in a row of rising sales.
Sreedhar Mahamkali, analyst at Macquarie Capital, said: “We expect a decent Christmas update from the sector with Tesco continuing to report the best like for likes in the sector.
“A key feature for a considerable period of time in Tesco’s recovery is the strong and consistent growth in grocery sales over the past several months.”
The group was further buoyed in December when its £3.7bn takeover of wholesale group Booker was given the final all-clear by the competition watchdog, which Mr Mahamkali also believes will boost growth.
Meanwhile, retail bellwether Marks & Spencer is expected to record another decline at its troubled womenswear division.
Broker Numis predicts that clothing and home sales at M&S fell by around 1% in the festive third quarter, which it said will “clearly be influenced by the level of tactical promotional activity”.
M&S is coming up against a much tougher comparison from a year earlier, when clothing sales rose by an impressive 2.3%.
The group gave hope last November that its turnaround under boss Steve Rowe was gaining traction in the embattled clothing and home division after a better-than-feared second quarter performance, when sales dipped 0.1% after a 1.2% fall in the previous three months.
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