High street remains in spotlight ahead of spending review

FOR the second consecutive week, the retail sector will be centre stage as the City mulls how vulnerable the high street is to the imminent coalition government spending review.

Last week retailers including Burberry, LVMH, WH Smith and Mothercare all claimed they were sufficiently resilient to withstand the knock-on effects on consumer sentiment of this Wednesday's spending announcement, expected to trigger fresh redundancies throughout the UK.

Home Retail Group (HRG), owner of DIY chain Homebase and catalogue showroom retailer Argos, puts out interim results on Wednesday having already warned the City that sales and margins under pressure will mean a fall in annual profits of up to 25 per cent.

HRG, which lost its place in the FTSE 100 index last month following a sharp fall in its share price, saw a decline in like-for-like sales of 6.5 per cent in the six months to the end of August, while Homebase's same-floorspace sales dipped 0.8 per cent.

The City expects the company to confirm that markets have been testing for Argos in "big-ticket" items such as furniture, but that computers and toys have continued to grow well.

Homebase is expected to report that core DIY sales have fallen, offset by strong sales of garden plants and outdoor furniture. Mark Photiades, retail analyst at Singer Capital Markets, expects half-year profits of 94 million, well down from the 116.8m in the same period of 2009.

On Thursday it's the turn of high street department store Debenhams to report annual results, having already flagged up a 20 per cent rise in profits. The consensus market forecast is a profit of 150m for the year to 28 August.

Leisure group Whitbread, owner of Premier Inn and Costa Coffee, posts interims tomorrow, having so far proved resilient to the downturn as business people turn to cheaper hotels and coffee sales hold up.

Analysts says that special offers at Premier have also boosted occupancy at weekends and holidays, with the subsidiary having unveiled a 10.9 per cent rise in like-for-like sales for the quarter to 19 August. The results will be the last for chief executive Alan Parker, who will step down in November, to be replaced by former EasyJet boss Andy Harrison.

Satellite broadcaster BSkyB is expected to say that there have been net customer additions of 53,000 for the quarter to September when it publishes trading figures on Friday ahead of its AGM. Sky has rejected an 8 billion offer from Rupert Murdoch's News Corporation for the 61 per cent of the company he does not already own.

Media groups behind the likes of the Daily Mail, Daily Telegraph, Guardian and Daily Mirror, plus broadcasters BBC, Channel 4 and BT, have claimed in a letter to Business Secretary Vince Cable that such a deal would threaten competition.

The market hopes for more details of a turnaround plan and refinancing solution from nightclub operator Luminar with its interims on Thursday. The owner of nightclub chains Liquid and Oceana said last month that sales slumped by a fifth over the six months to 26 August as clubbers stayed away.

Housebuilder Bellway is set to show a return to more normal property market conditions in its full year results on Tuesday, with consensus pointing to profits of 42m, up from 29.8m in the previous year.