The Week Head: Updates due from Debenhams, JD Sports Fashion, ASOS, French Connection and Redrow

The Debenhams store in Oxford Street, London.

The Debenhams store in Oxford Street, London. - Credit: PA

The focus on the retail sector will continue this week, with updates due from Debenhams, JD Sports Fashion, ASOS and French Connection.

Debenhams should reap a sales boost from the impact of the warm summer on seasonal fashion lines when it updates on recent trading on Tuesday.

The department store chain will report on trading since late June, with soaring temperatures expected to have lifted sales after the cold spring. The update, ahead of annual results due next month, follows a lacklustre March-to-June period when like-for-like sales were flat amid weak consumer confidence and freezing temperatures which hit seasonal clothing lines.

But analysts at Nomura expect Debenhams to post underlying sales growth of 2.1% for the year to the start of September, after improved recent trading. They see like-for-like sales between late June and early September also rising by 2.1%, with cost cuts in stores and more online efficiency underpinning profits.

However, for the full-year, analysts on average still see the chain’s pre-tax profits dipping to £153million from £158.3m a year earlier.

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Sportswear retailer JD Sports Fashion is set to report a slow path to recovery in its Blacks and Millets outdoor division when it posts first-half results on Wednesday.

The group, which bought the brands out of administration for £20m in January 2012, recently warned of first-half losses from outdoor in the six months to August as the turnaround has taken longer than expected.

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Its fashion arm, which trades under the Bank and Scotts brands, has also struggled, with underlying sales falling 5% in the 18 weeks to the start of June. JD warned to expect bigger losses in this division.

But weakness in its outdoor and fashion arms contrasted with “robust” trading in its core sports business, which grew like-for-like sales 7% during the period. Analysts N+1 Singer forecast adjusted pre-tax profits of £70m for the full year, up from £60.5m a year earlier.

Online fashion firm ASOS is expected to report more solid trading on Thursday after recently notching up its best UK sales growth in four years.

The appeal among its core twenty-something customer base has shown no signs of waning, with the firm reporting a 39% leap in UK sales and 48% rise in international revenues over its third quarter to May 31, driving a 45% hike in total retail sales.

Analysts at UBS are pencilling in a slight slowdown in sales growth over the fourth quarter to 30% for the UK and 37% overall as it comes up against tougher comparatives from a year earlier, but said the “strong trend” will continue.

ASOS reported an 11% leap in pre-tax profits to £25.6m in the six months to the end of February and Deutsche Bank is predicting a 33% rise in full year pre-tax profits to £53m.

An overhauled summer range is likely to have provided a boost to first half trading at fashion retailer French Connection as the group’s revival plans begin to pay off.

The chain, which reports half-year figures on Wednesday, recently revealed “broadly flat” UK and European retail like-for-like sales in the first quarter, a marked recovery from the 7% plunge in the previous financial year.

Analysts are expecting a further pick up in the second quarter thanks to a well received spring/summer selection and in-store changes.

French Connection slumped to an overall bottom-line loss of £10.5m in the year to January 31, against profits of £5m the previous year.

Andrew Wade, retail expert at Numis Securities believes there will be some improvements in the first half, but that the group will remain in the red. As the turnaround plans gain traction over the remainder of the year, he predicts annual losses will narrow to £5.5m.

Away from retailing, housebuilder Redrow will report a year of soaring trading on Wednesday as it capitalises on a housing market fuelled by state stimulus schemes.

The Flintshire-based builder has already flagged 12 months of surging revenues, which rose 26% to £604.8m in the year to the end of June.

Analysts on average expect pre-tax profits to climb to £65.7m from £43ma year ago, as it makes more money by building on land acquired cheaply during the downturn, plus selling its homes for more.

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