A number of the UK’s biggest retailers are slated to publish their Christmas trading updates next week, after an initial batch of updates this week indicated mixed results for the high street so far.
Among the heavyweights to reveal their Christmas results next week are Tesco, Marks & Spencer, John Lewis, Sainsbury’s and Morrisons.
AO World and Ted Baker are also expected to reveal their festive trading figures next week, while Superdry will reveal its full half-year results.
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It comes after UK retail bellwether Next published a strong Christmas trading update this week, while department store giant Debenhams – which brought forward their update to this week instead of next – issued a profit warning amid worse-than-expected results.
Other major retailers to have issued Christmas trading updates this week include Jigsaw, Mountain Warehouse, Nisa, Westfield, Gear4Music and Aldi – all of which enjoyed profitable festive trading periods.
City analysts are keeping a close eye on the impending Christmas updates from Tesco, the UK’s biggest retailer, and M&S, which, like Next, is often regarded as a bellwether for the country’s retail industry.
Tesco, which has been undergoing a turnaround under chief executive Dave Lewis, is predicted to continue along the road to recovery with a 2.4 per cent like-for-like sales increase forecast by UBS for both the Christmas period and the third quarter as a whole.
It comes as Tesco posted a better-than-expected 27 per cent uplift in group underlying earnings to £759 million for the six months to August 26, as well as recording its seventh consecutive quarter of rising sales.
“We expect a decent Christmas update from the sector with Tesco continuing to report the best like for likes in the sector,” Macquarie Capital analyst Sreedhar Mahamkali said.
“A key feature for a considerable period of time in Tesco’s recovery is the strong and consistent growth in grocery sales over the past several months.”
Mahamkali believes Tesco’s £3.7 billion takeover of grocery wholesaler and convenience store operator Booker – which was given the final approval by the Competition and Markets Authority before Christmas – will also boost the supermarket giant’s growth.
Meanwhile, M&S is forecast to record another decline, with broker Numis predicting clothing and home sales to slip by around one per cent in its festive third quarter.
M&S is also being pit against a tough comparison from a year earlier, when clothing sales rose by 2.3 per cent.
The retailer previously said its turnaround under chief executive Steve Rowe was gaining traction in the clothing and home division due to a better-than-feared second quarter performance, when the decline in sales slowed to 0.1 per cent compared to the 1.2 per cent fall in the first quarter.
However, Numis highlighted that M&S’s clothing and home division will take longer, and be more costly, to turnaround than expected.
The firm also predicted food sales would be flat once again after falling 0.1 per cent in the second quarter.
M&S has also previously said it would accelerate its plan to close under-performing clothing stores and slow expansion of its food stores, while “reshaping” its clothing and home and driving online sales.
In its half-year report, M&S recorded a 5.3 per cent dip in underlying pre-tax profits to £219.1 million for the six months to September 30.
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