The Week Ahead: Updates due on Currys, PC World, Argos, Homebase, Halfords, Primark and JD Wetherspoon

Currys and PC World owner Dixons is among the retailers due to report Christmas trading figures this

Currys and PC World owner Dixons is among the retailers due to report Christmas trading figures this week - Credit: Archant

THE flurry of Christmas trading updates will continue this week, with festive figures from companies including Currys and PC World parent Dixons Retail and Argos owner Home Retail Group.

The collapse of consumer electronics chain Comet is expected to have provided a boost to PC World and Currys over Christmas, with the Dixons group also set to have reaped the rewards of soaring demand for tablet computers.

City experts predict the group’s update on Thursday will reveal like-for-like sales in the UK and Ireland up by between 4% and 6% in the 12 weeks to January 5 after a surge over the crucial festive trading period.

It has already been hailed the Christmas of the tablet computer by other retailers as traditional toys were shunned in favour of the tablet computer, with the British Retail Consortium’s December figures confirming it was a winning product.

Littlewoods and Very.co.uk parent Shop Direct Group revealed in its trading update that it had sold one every 40 seconds in the run up to Christmas.


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But analysts also believe Dixons benefited from a strong showing in the electricals market as a whole.

Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, said: “We have already seen solid consumer demand for electrical goods in other retailers’ Christmas trading figures and the demise of major rival Comet is expected to have assisted sales.”

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Dixons has already had a good start to its financial year, reporting in November that sales were up 3% in the 24 weeks to October 13 as customers bought new televisions for the Olympics.

The group narrowed its half-year underlying pre-tax loss to £22.2 million, down from £25.3 million in the same period last year, and chief executive Sebastian James said the group was “outpacing” its competitors.

While Dixons Retail is expected to have benefited from the demise of Comet, rival Argos is set to reveal a more “subdued” performance.

Analysts predict Thursday’s update will show like-for-like sales growth eased back to 0.2% in the third quarter, behind its better-than-expected first half when like-for-like sales were up 0.6% in the six months to September 1.

Christodoulos Chaviaras, analyst at Barclays Equity Research, said he expected the benefit of the early launch of the group’s autumn/winter catalogue, which spurred on the first half sales, to be reversed.

He said: “We would expect Comet’s demise to have had some positive effect on Argos’ Christmas sales, although we continue to favour Dixons under these circumstances given their strong geographical overlap with the closing Comet stores.”

He also said he expected margins to be down this Christmas after Argos had a more promotional festive season.

But Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, was more upbeat.

He said Tesco’s focus on its core UK food business would further reduce competition for Argos.

“The wet weather may have helped the group’s online businesses, with consumers preferring to shop from the comfort of home,” he added.

In October, the group announced its catalogue was to get a digital makeover in an attempt to reverse two years of falling sales. Argos announced that circulation of the print version would be cut as part of an internet push, that will also see at least 75 stores closed or relocated over the next five years.

But the group is resisting pressure for widespread shop closures, saying it would keep stores “at the centre of what we do”.

Home Retail also said it wanted to broaden the appeal of its Argos chain to a wider customer base, but keep the focus on families.

Analysts predict third quarter like-for-like sales at its homes and gardens business Homebase will drop 2.1%, with a subdued DIY market over Christmas and trade also hit by the severe wet weather.

Sales growth is expected to have slowed over Christmas for retail chain Halfords following a second quarter surge in demand for cycles amid the so-called “Wiggins effect”.

Analysts at Barclays Capital predict Halfords, which reports on Tuesday, will reveal retail sales growth of 0.5% over Christmas - a sharp slowdown on the 4.6% hike seen in the second quarter.

The second quarter sales leap came after the British success in the Tour de France and Olympics from the likes of Bradley Wiggins and marked a welcome recovery from a dire previous three months, when poor sales of cycles and outdoor goods saw like-for-like revenues plunge 7.5%.

The group brought in former Pets At Home boss Matt Davies as its new chief executive in October, replaced David Wild, who quit immediately in July amid news of a profit warning and a sharp sales decline.

Despite the expected Christmas slowdown, Claire Huff at Barclays Capital said she remained confident in Halford’s second half performance.

She believes a new range of bikes from Olympic cycling gold medalists Victoria Pendleton and Chris Boardman will help Halfords stay on track.

“Although the UK consumer environment has not yet normalised, we remain confident that the new product launches and an improved online offering should benefit Halfords over the key Christmas trading period,” she said.

She added that new cycle ranges, including premium bike brands Tifosi and Cinelli, and the expansion of ranges of products such as clothes will likewise help the group.

City analysts also believe an improvement to customer service after the company boosted staff numbers will help the car parts and bicycle retailer remain in line for full year pre-tax profits of £70.1 million, although this is 24% below the previous year after the first quarter setback.

The group announced plans last year to create 1,000 jobs over the next three years to evolve Halfords from a traditional retailer into a “friend of the motorist”, the best cycle shop in town and starting point for great getaways”.

Jonathan Pritchard, analyst at Oriel Securities, said that while sales will slow down in its cycling business, underlying demand remained strong and Halfords was winning market share.

Pub chain JD Wetherspoon is set to report slowing sales over its Christmas quarter as the group nurses an Olympic hangover.

Experts at Deutsche Bank predict a “muted” 1.5% rise in like-for-like sales in the pub chain’s second quarter, which will be markedly down from its first quarter, when like-for-like sales jumped 7.1% amid a London 2012 boost.

The group, which posts figures on Wednesday, warned the level of sales would not be sustained and City analysts also said figures would come up against strong comparisons after a successful Christmas in 2011.

But Simon French, analyst at Panmure Gordon, is pencilling in a more encouraging 3% hike in like-for-like sales in the 13 weeks since October 29, after what he believes will have been a “fairly strong Christmas and New Year trading period”.

Wetherspoons, which has more than 860 pubs, has extended it traditional January sale - including £2.99 meal deals - to the end of the month.

Geof Collyer, managing director of the leisure team at Deutsche Bank Equity Research, said the meal deals would put more pressure on margins.

Wetherspoons already warned in November that margins would be squeezed by increased taxes, utility bills and higher wages, as well as rises in bar and food supplier costs.

It has reined in its pub expansion plans, with the group set to open 25 this financial year, compared with 40 pubs last year.

A continued squeeze on incomes looks set to play into the hands of Primark owner Associated British Foods on Thursday.

Experts from JP Morgan predict like-for-like sales at the budget fashion chain will be up 2% in its first quarter trading update on Thursday, despite tough comparisons after a buoyant Christmas last year.

Primark’s performance will be watched closely after a season of mixed fortunes for the major retailers.

John Lewis and Next both posted strong sales growth over the crucial trading period, while Marks & Spencer reported a near 4% slump in its non-food sales.

Neil Shah, global head of research at Edison Investment Research, said Primark was pinching market share from M&S through its affordable underwear staple garments.

At its annual general meeting in December, AB Foods chairman Charles Sinclair said the momentum from a strong finish to its last financial year had continued into the first two months of the year.

Primark racked up £3.5 billion in sales and created 10,000 new jobs in its year to September 15, with like-for-like sales 3% higher.

But Mr Sinclair also warned in December that the wider group - the owner of British Sugar - would see a reduction in sugar profits.

Celine Pannuti, analyst at JP Morgan, said margins at Primark would be helped by lower raw material costs.

She added that AB Foods’ grocery division - which includes household brands Kingsmill, Ryvita and Twinings - would see flat revenue growth.

Primark, which has 161 of its 256 stores in the UK, grew operating profits by 15% to £356 million in the year to September 15.

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