The Week Ahead: Updates due from Mothercare, William Hill, Ladbrokes, Bellway and Booker
PLANS by Mothercare to become a leaner and more competitive business will be tested this week, while bookmakers William Hill and Ladbrokes will also be in focus.
Mothercare’s UK sales are expected to show a modest improvement on Thursday as online growth offsets an ongoing weak performance at its stores.
The group, which also owns the Early Learning Centre, is forecast by analysts at N+1 Singer to report a 5% drop in like-for-like sales in the second quarter of the year, compared to a near 7% drop in the first quarter.
After a difficult period, the company has recently sounded more optimistic, with new boss Simon Calver’s plan to reduce UK store numbers from 311 to 200 by 2015 still on track.
The babycare firm, which slumped to a �103 million loss in the year to March, has also seen its revamped website start to deliver positive sales growth.
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Meanwhile, its international division, which has offset some of the weakness in the UK, is also expected to show an improvement with growth of around 18%, compared to 11% in the first quarter.
The trading update will be scoured for signs of further progress with Mr Calver’s plans.
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The new UK estate will comprise 95 out-of-town sites and 105 high street locations, while the closures should improve UK profitability by �13 million by March 2015. The group secured a refinancing deal with its banks HSBC and Barclays to fund the store reduction programme.
Final results from housebuilder Bellway on Tuesday should confirm a sharp rise in profits as it benefits from a shift towards more traditional family homes.
The group saw profits leap 69% to �40.6 million in the six months to January 31 and analysts expect this trend to have continued at the full-year stage, pencilling in a hike from �67.2 million to �100 million.
Bellway, the UK’s fourth biggest housebuilder, has shifted towards family homes and away from flats, as they are more exposed to first time buyers who are struggling to get on the property ladder.
Profits have also been boosted by the impact of purchasing cheaper land in the wake of the recession.
It lifted City expectations in August when it revealed that sale completions rose 6.2% to 5,226 over the year to July 31, with the average selling price increasing by more than 6% to around �187,000.
But the market will be interested to hear how the housing market has fared since its year-end.
Bellway has been at the forefront of demands for more affordable mortgages for house buyers, saying earlier this year that there was still a lack of high loan-to-value deals despite the Government-backed NewBuy scheme to encourage lending on newly built homes.
Lenders have begun offering better rates since the Bank of England and Treasury launched its �80 billion Funding for Lending scheme, but it remains to be seen if this has filtered through to the housing market.
Bellway also announced in the summer that its chairman Howard Dawe, who has been with the group since 1961, was retiring in January and that chief executive John Watson will replace him, with operations director Ted Ayres becoming the new chief executive on February 1.
Trading updates are due from both Ladbrokes and William Hill, but attention will be focused on William Hill’s takeover plans for online gaming firm Sportingbet as the deadline for a deal looms.
Sportingbet rejected a recent �350 million proposal from William Hill and its bid partner GVC, the European gaming firm, as being too low
Speculation has been mounting over whether the suitors will come back with a higher potential offer before the end of Tuesday, when it must make a firm bid or walk away.
William Hill’s boss Ralph Topping was reportedly set to return with a revised offer which could value Sportingbet at more than �400 million.
It is thought they will seek to extend the deadline, but Numis Securities analyst Ivor Jones said they may just walk away. “We believe William Hill/GVC will probably not get close enough to Sportingbet’s price ambitions,” he said.
Friday’s update from William Hill is also expected to see the group announce plans to seize full control of Playtech, taking up an option it has to buy the remaining 29% stake in the gaming technology group.
Looking at the figures, Panmure Gordon analysts believe better-than-expected football results and a �6.6 million gross win from Euro 2012 will help William Hill offset a poor horse racing season in its third quarter.
Rival Ladbrokes will likely reveal a similar trend when it updates on Thursday, but the market will also be looking for confirmation that it can deliver its highly-anticipated new Ladbrokes.com website by the end of the year.
Panmure Gordon analyst James Cooke expects the online relaunch to increase its sportsbook revenues by 20%.
Home shopping firm N Brown will reveal if womenswear sales picked up after a weather-impacted first quarter when it reports interims on Tuesday.
The wettest April to June on record left womenswear sales lower-than-expected in the 17 weeks to June 30.
But the online and mail order catalogue group put in a resilient overall performance, with sales up 1.9% due to menswear, footwear, lingerie and home.
Analysts at Numis Securities said the robust first quarter result demonstrated N Brown’s “resilience and diversified product base”. But it is unclear how sales fared in the second quarter, which also got off to a wet start and was dominated by the Olympics.
The non-store retail sector suffered during London 2012, with a 6.7% plunge in sales between July and August marking the worst monthly performance in nearly five years as consumers chose to watch the Olympics on television rather than shop on the internet.
Analysts are expecting N Brown’s half-year pre-tax profits to fall to �40.7 million from �44 million a year earlier.
Profit margins were lower than expected at the start of the year, due to the womenswear hit and strong take-up of discount deals. But N Brown said it was expecting an improvement later in the year as it plans to put out lower stock volumes, which will reduce sales of excess goods.
The group’s brands include lingerie retailer Figleaves, Simply Be for larger sizes and menswear ranges Jacamo and High & Mighty.
Cash-and-carry chain Booker reports interim results on Thursday after a robust first half.
The Northamptonshire-based firm said underlying sales rose 4.4% in the 12 weeks to September 14, up from 1.7% growth the previous quarter.
Its sales boost was driven by strong tobacco sales and a good performance from its cash-and-carry and delivery arms.
However, the Makro wholesale business it bought in July was hit by ongoing difficult trading.
Booker is also still waiting for the deal to be cleared by the Office of Fair Trading (OFT) and is having to hold it as a separate investment in the meantime.
Nicola Mallard, analyst at Investec Securities, expects first half profits excluding Makro to rise by more than 10% to �46.8 million, while Panmure Gordon is pencilling in profits of �48 million.
There are hopes the OFT may rule on the Makro deal this month, which would enable Booker to start moving ahead with turnaround plans for the acquired business, which has 30 sites and more than a million customers.
It said last month the addition of Makro would allow it to “improve choice, prices and service” for customers.
Booker has 172 branches and supplies nearly half a million businesses including corner shops, pubs and restaurants.