First things first as transport group prepares for update

FirstGroup, operator of the ScotRail franchise, will take its turn in the spotlight in an update on Wednesday although the City's focus has recently been elsewhere in the sector.

A potential bid battle over rival Arriva has grabbed the attention of investors, but sector watchers will be looking to see whether the Scots firm can improve on a disappointing third-quarter update in January.

First, which carries around three million bus passengers every day, said revenue growth from the division eased from 2.3 per cent to 0.7 per cent in the quarter to 31 December.

Deutsche Bank analysts nonetheless rate the group above many of its rivals due to a stronger balance sheet.

They said: "The company has extended the average debt maturity profile, lowering the risk of the company and we believe the shares are now attractively priced relative to the sector."

The City will be hoping for further sales momentum from parenting chain Mothercare in its update on Thursday after the retailer enjoyed healthy Christmas trading.

Mothercare said it saw a "particularly good" festive season – as well as surging Christmas Day shopping online – as it posted its 18th consecutive quarter of like-for-like sales growth in the 13 weeks to 8 January.

The firm has also recently announced a tie-up for an exclusive range of clothing and accessories to be sold through Boots stores.

The two companies will launch the collection in Boots outlets across the UK and Ireland this autumn, extending an existing relationship through which Mothercare sells Early Learning Centre toys in more than 400 Boots outlets.

Numis analyst Andrew Wade said the move was "very positive" and could add 5 million to profits in the year to March 2012.

Italian restaurant chain Prezzo is set to report lower annual profits on Thursday despite stronger trading in the second half of 2009.

In January, the pizza and pasta firm said results for the year to 27 December would be better than City hopes, although the company expects "challenging" economic conditions to persist throughout 2010.

Prezzo is fighting in a highly competitive market, while January's return of VAT to 17.5 per cent is likely to squeeze margins in the year ahead.

The firm, which currently has 138 restaurants, has nonetheless decided to maintain its expansion plans with the opening of a further ten outlets this year.

Seymour Pierce analyst Hugh-Guy Lorriman predicts underlying pre-tax profits will fall from 11.5m to 10.8m for 2009, but says the group's low-cost model is undervalued by the market.

Book publisher Bloomsbury's full-year results, due tomorrow, are likely to show a slide in annual profits despite "excellent" sales last year.

Consensus forecasts suggest pre-tax profits will come down from 11.7m to 7.6m in 2009 as the firm adjusts to life after the Harry Potter phenomenon.

Goodfella's pizza and Fox's biscuits group Northern Foods updates on annual trading on Wednesday after a mixed year.

Northern Foods – which is also a major supplier to Marks & Spencer – said at the end of January that it had put in a "solid" Christmas performance, but the group's sales performance has not been consistent.

Like-for-like sales in the first nine months rose by 1.9 per cent in what marked a slowdown on the 2.9 per cent seen in the first six months.

Northern said in January it was continuing to trade in line with market expectations for annual results, with analysts pencilling in operating profits of 54.3m against 52.7m a year earlier.

It recently started a ten-year food supplier contract with British Airways.