City spotlight falling on the retail sector

RETAIL dominates company reporting this week, with Marks & Spencer, Debenhams, WH Smith and Tesco among the well-known names due to post results or update the market.

M&S puts out its fourth-quarter sales tomorrow, having reported a 1.8 per cent fall in like-for-like general merchandise sales in the 13 weeks to end-December, while food sales rose 3 per cent.

Customers buying summer clothes in the late-March heatwave are expected to have given non-food sales a fourth quarter boost. Meanwhile, food sales are expected to have put in another strong performance, up a forecast 1.6 per cent.

The City consensus for full-year pre-tax profits at M&S is £694 million, compared to £714m in the previous 12 months.

WH Smith is set to announce pre-tax profits up £1m to £65m when it delivers its latest results on Thursday.

It is thought one of the main drivers will be cost-cutting that has improved profit margins at the stationery-to-newspapers-and‑music group. The company has already reported that underlying sales fell 6 per cent in the high street business in the 21 weeks to 21 January.

WH Smith chief executive Kate Swann has changed the strategy of the group over the past few years by shifting the focus from selling DVDs and CDs onto higher-margin books and confectionery. Staff levels have fallen 24 per cent in the past six years in WH Smith’s high street stores.

Price-cutting along the high street is expected to have dented profits at department store chain Debenhams when it reports half-time results on Thursday.

Richard Edwards, an analyst at Citi, expects it to report profits of £125m, down 3 per cent on the previous year, even though Debenhams is likely to become the latest retailer to say it has benefited from falling cotton prices.