The Week Ahead: Sainsbury’s, Next, Greggs, Ted Baker and Smiths due to report
- Credit: PA
SAINSBURY’S and Next will be among the highlights this week as the retail sector remains in sharp focus.
Supermarket giant Sainsbury’s is expected to reveal more sales cheer on Tuesday as the chain has emerged relatively unscathed from the recent horse meat crisis that has rocked the industry.
The group was the only one of the big four supermarkets to increase its market share as its rivals suffered amid the food scandal, according to recent data from Kantar Worldpanel.
While Tesco, Asda and Morrisons either failed to increase their market share or suffered falls, Sainsbury’s saw its share rise to 17% from 16.9% a year earlier in the 12 weeks to February 17.
The Kantar figures came just a week after Sainsbury’s said that no horse meat had been found in its beef products, having now done 300 tests in line with Food Standards Agency requirements.
Most analysts are forecasting like-for-like sales, excluding fuel, to rise by 2.3% for the 10 weeks to March 16.
This would be a significant improvement on the 0.9% rise over the Christmas period and puts smaller rival Morrisons firmly in the shade after it recently reported back on a difficult fourth quarter which was its decline inlike-for-like sales accelerate to around 4%.
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Sainsbury’s is also seen outpacing Tesco, which Shore Capital believes is facing 0.5% sales growth at best in its fourth quarter. “We believe Sainsbury deserves credit in the effective application of its trading strategy, which is leading to sustained market outperformance,” said Shore.
Retail chain Next has already set the scene for decent annual results on Thursday after it weathered difficult high street conditions to post a 3.9% hike in festive sales.
An 11.2% jump in sales at its thriving online operation was behind the performance, although trading in its stores was also better than forecast, up 0.8% in November and December.
Next said its robust Christmas trading had put it on track for profits growth at the top end of expectations, pencilling in a jump of between 7.1% and 9.6% in pre-tax profits to between £611million and £625m for the year to January.
The fashion and homewares group said the better-than-expected performance reflected cost controls, less marked-down stock in the end of the season sale and improved margins.
Investors will be keen for news on whether sales remained robust throughout the snow in January, with some analysts believing the adverse weather may see Next post profits at the mid-range of expectations.
However, department stores chain John Lewis said it saw little impact from the snow, when it revealed a 16% surge in annual profits to £409.6m earlier this month.
John Lewis hailed its website as a key reason for its success, with johnlewis.com sales up 41% to £959m, accounting for a quarter of trade, and this is also likely to be a trend confirmed at Next, where its online Directory business has been the star performer of late.
Analysts at Cantor Fitzgerald said that Next has “created a profitable multi-channel offer where the stores and directory support each other”.
Next, which has more than 500 shops, plans to create a further 250,000sq ft of retail space this year, including a net increase of 10 new shops, and will continue to grow its Directory operation in the UK and overseas.
The new boss of high street baker Greggs will unveil his first set of annual results since taking on the top job in February after a difficult past year.
Roger Whiteside, formerly the boss of pub company Punch Taverns, takes on the reins as Greggs battles against sliding sales and rising costs of its key ingredients.
Consumer belt-tightening saw half-year profits slide 4.6% to £16.5m, despite its efforts to keep a lid on costs, and there was little cheer over the Christmas period either as Greggs said the severe wet weather combined with ongoing difficult trading conditions to send sales down 2.9%.
Analysts are expecting Wednesday’s results to show underlying pre-tax profits remaining broadly flat at £53.8m, against £53.1m in 2011.
Designer fashion brand Ted Baker will reap the rewards of a recent expansion drive when it posts results on Thursday.
Analysts are expecting another double digit profit increase, pencilling in a 17% jump in pre-tax profits to £31.6m after a year of robust sales.
The performance marks a further improvement on the 12% profits leap seen in 2011 and comes after Ted Baker bucked the gloomy economic climate by expanding across the UK, US and Asia.
Conglomerate Smiths will reveal whether it managed to maintain its resilient performance in half-year results on Wednesday after shrugging off government cuts in its previous financial year.
The group, which makes sensors used in finding explosives, weapons and drugs, posted a 7% rise in full-year profits after its airport scanners and bomb detection arm delivered a 13% hike in earnings.
Scott Cagehin, analyst at Numis Securities, is predicting a 17% rise in half-year pre-tax profits to £253m, but says the group’s performance is likely to have been mixed across its divisions.