Next week is set to be pivotal in defining how the retail sector performed during the festive period as several large retailers update on their trading.
Who: Morrisons
When: Monday
Period: Christmas trading over the six weeks to December 30.
What to expect: The UK’s fourth largest grocer is expected to report a significant fall in like-for-like sales over Christmas as its lack of an established convenience or online offer, as well as promotions from competitors, effected performance. Jefferies analyst James Grzinic said: “Recent market share updates have highlighted soft trading momentum at Morrisons. We believe this likely reflects consumers trading down to discounters and continued online share shift. We now assume Christmas like-for-like sales to have fallen by 2.8%.” Some analysts have also suggested Morrisons may issue a profit warning.
Who: Debenhams
When: Tuesday
Period: First quarter update for the 18 weeks to January 5
What to expect: The department store has shown positive trading momentum in recent months and analysts expect this to continue. Its first Christmas TV advert for six years, as well as promotions, is likely to have supported sales growth. The retailer is expected to report a 3% uplift in like-for-like sales, according to Investec analyst Bethany Hocking.
Who: Dunelm
When: Tuesday
Period: 26 weeks to December 29
What to expect: Dunelm does not traditionally make a large proportion of its sales over the Christmas period, and despite its robust performances over recent quarters, some analysts are expecting a slowdown from the value homewares retailer in the second quarter. Investec analyst Bethany Hocking said: “We expect a slowdown from the +3% like-for-like reported for the first quarter. We pencil in flat like-for-like and a small gross margin gain.”
Who: Majestic Wine
When: Tuesday
What to expect: Investec analyst Bethany Hocking said: “Against one of the toughest comparatives of the year, we pencil in 0-1% like-for-like, broadly in line with our full-year assumption. We expect the competitive environment to have been tougher than ever this Christmas, but expect Majestic to have held its own, particularly given its service-led strategy.”
Who: Sainsbury’s
When: Wednesday
Period: Third quarter update for the 14 weeks to January 5
What to expect: Sainsbury’s may be on the verge of reporting a slowdown in performance after a stellar 2012 when its sponsorship of the Paralympics defined a strong year. However, tough comparatives and the loss of customers Waitrose claims it has won from Sainsbury’s over Christmas may have cost it. Oriel Securities analyst Jonathan Pritchard said: “It appears the established podium lineup (Waitrose, Aldi, Lidl) stretched their lead but the biggest slowdown may have come at Sainsbury’s.” The consensus for Sainsbury’s is a 0.9% increase in like-for-likes excluding fuel, including VAT.
Who: Ted Baker
When: Wednesday
Period: Christmas trading from November 11 to January 5
What to expect: The quirky fashion retailer appears likely to report a positive Christmas after trading strongly throughout 2012. Its gifting and accessories offer is expected to have played a key role in spurring festive sales. The retailer is also likely to give an insight into how stores in the US have recovered from the effects of Hurricane Sandy.
Who: Tesco
When: Thursday
What to expect: With its Christmas trading update last year, the UK’s largest retailer issued its first profit warning in 20 years and a reset of UK investment plans. This year promises to be a little less dramatic but just as crucial with a strong Christmas likely to be a good indicator of whether chief executive Philip Clarke’s £1bn plan to turnaround the UK business is working.
Who: JD Sports Fashion
When: Thursday
What to expect: The recent trend of the retailer’s Sports division performing strongly while Fashion proves more difficult is likely to continue. Analysts will also be keen to see progress at Blacks, according to Investec analyst Bethany Hocking, who expects betwen 0% and 1% uplift in UK like-for-likes at JD.
Who: Marks & Spencer
When: Thursday
Period: Third quarter update for the 13 weeks to December 29
What to expect: Analysts will be watching performance in the high street bellwether’s general merchandise division closely after five consecutive quarters of negative growth in the division. While top-line figures may remain positive it may come been down to the M&S food division – always a strong performer at Christmas and with good momentum in its sails according to recent Nielsen data – to prop up overall sales. Investec forecasts a 1% dip in general merchandise like-for-likes and a 2% rise in food, giving an overall expectation of 0.5% across the UK.
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