The week ahead: Consumer-facing stocks dominating City’s diary

By PETER RANSCOMBE
Published on 22/10/2012 00:00

INVESTORS will get a taste of current consumer spending levels this week when the owners of brands including Argos, Costa and Mr Kipling all report on recent trading.

Home Retail Group has cheered investors in recent months with a return to sales growth at catalogue chain Argos as demand for iPads and Kindles has offset declining interest in video games and MP3 players. But the firm will need to convince investors that its recovery is still on track as it is expected to reveal a near-60 per cent slide in pre-tax profits to £12.2 million in the 26 weeks to 1 September.

The continued improvement in consumer electronics resulted in like-for-like sales growth of 1.4 per cent in the 13 weeks to 1 September, following a 0.2 per cent drop in the first quarter. This gave sales growth of 0.6 per cent for the first half of the year.

A strong set of interim results on Wednesday will reduce some of the pressure on the chain to close stores amid a review being carried out by strategy consultants OC&C to help new managing director John Walden assess Argos.

Leisure group Whitbread will reveal a jump in half-year profits tomorrow as its Costa and Premier Inn businesses continue to deliver market-beating performances.

Costa, which has nearly 1,400 outlets in the UK, and Premier Inn have consistently been the top performers in the group’s portfolio, which also includes restaurants Beefeater and Brewers Fayre.

Whitbread is expected to reveal a 10 per cent leap in pre-tax profits in the six months to 16 August of £191m, on a 14 per cent rise in revenues to £1 billion.

The rise in profits will come from strong like-for-like sales growth at Costa, up 7.1 per cent in the period, and Premier Inn, up 4 per cent. Shares in Whitbread are 40 per cent higher than they were at the start of the trading period.

Mr Kipling parent Premier Foods will reveal how it fared in recent trading after a first half that was boosted by its “Great British Fancies” campaign for the Queen’s Diamond Jubilee.

The group saw a 2 per cent rise in interim sales of its eight front-line brands thanks in part to the launch of a patriotic range of Mr Kipling cakes and a major advertising push. Its main brands – which also include Ambrosia desserts, Bisto gravy, Hovis bread, and Loyd Grossman sauces – delivered a 3.2 per cent rise in half-year trading profits to £53.2m.

But the market will be keen for news in tomorrow’s third quarter update on whether the summer of celebration surrounding the Olympics maintained strong sales.

Department store Debenhams reports full-year results on Thursday after a recent resurgent performance.

The group ended its year on a high, reporting a 3.7 per cent hike in like-for-like sales excluding VAT in the ten weeks to 1 September. Online sales were particularly strong, up 40 per cent, and it grew its share of the under-pressure womenswear market.

AstraZeneca’s new chief executive, Pascal Soriot, will unveil his first set of figures when the drugs giant updates on Thursday. Soriot replaced David Brennan, who quit after a shareholder rebellion over pay and performance.

While Soriot is expected to take a back seat at this week’s announcement, the ex-Roche boss has started to make his mark ahead of announcing his strategy plans in the new year.