Hot weather boosts Next, but outlook appears cooler

Fashion chain Next's update on Wednesday should show strong trading thanks to hot weather, but questions will focus on the future outlook given the impact that deficit-tackling plans are likely to have on the high street.

In the 13 weeks to 1 May, the group's like-for-like retail sales were down 0.8 per cent on the previous year - but Directory online and catalogue sales were better than expected, helping push sales across the overall Next brand to the top end of management hopes.

While surveys and official figures have shown a strong recent performance by the retail sector Next said in May it was "very cautious" about prospects.

City forecasts for the full year put profits at between 525 million and 565m, although Next has already guided to the top end of this range.

Panmure Gordon analyst Jean Roche expects high street like-for-like sales to hold steady over the first half as a whole, with another better than expected showing from Directory.

"We think that the clothing retailers in particular can continue to surprise on the upside through 2010," said Roche

"Although the market expects the UK macro backdrop to weaken slightly, retail sales have been resilient especially over the past two months.

"The timing of the UK VAT increase has been benign and should even allow retailers to tuck away some extra gross margin in the second half of the year," she added.

The UK's biggest bookmaker, Ladbrokes, is expected to show flat profits for the half year on Thursday as a strong World Cup is cancelled out by a hammering for the layers at Royal Ascot.

Analysts currently expect pre-tax profits of 99m from the firm, scarcely improving on last year's 98.6m.

Ladbrokes' new chief executive Richard Glynn joined in April from betting firm Sporting Index with a 12m incentive to double the group's share price.

He said in May profits were "broadly" in line with expectations, but added the strength of consumer confidence was "difficult to gauge".

The market will be hoping for an update on the strategic review at ITV by new chief executive Adam Crozier and chairman Archie Norman when the broadcaster reports interim results on Tuesday.

Crozier, who joined from Royal Mail in April, has been working with Norman on plans to revive the group as it emerges from one of the worst advertising slumps in living memory. The group saw strong results in the first quarter, with revenues up 6 per cent to 450m, driven by an 8 per cent improvement in television ad sales.

The World Cup is expected to have boosted this to 22 per cent in the second quarter and Numis Securities analyst Paul Richards is pencilling in a decent first-half performance.

He predicts pre-tax profits of 115m against losses of 14m a year earlier.

ITV has also been seeing marked improvements in its ad markets. The group saw strong results in the first quarter, with revenues up 6 per cent to 450m, driven by an 8 per cent improvement in television ad sales.

On the strategic review, Richards expects an increased programming budget and further investment online to be two of the main focus areas.

"The rapid rebound in advertising should fund the additional investment we believe is needed in programming and online at ITV," he added.

Housebuilder Taylor Wimpey reports interims on Tuesday amid mounting signs the property market revival may be running out of steam.

Nationwide's latest index revealed a drop in prices of 0.5 per cent in July - the first decline recorded by the building society since February.

Taylor will be eyed closely for its thoughts on how the market is being impacted by austerity measures. The group has already flagged up fears over planning delays and spending cuts, which could see the axe fall on housing initiatives and social housing grants.

Of the banks, HSBC is first up with its figures on Monday, with expectations for lower bad debts set to be the main focus.

Credit Suisse analysts believe impairment charges in the US will have fallen by around a quarter in the first half of the year.

Bad debts are also likely to be in the spotlight for part-nationalised players Lloyds Banking Group and Royal Bank of Scotland, which report on Wednesday and Friday respectively.

Seymour Pierce is expecting lower impairment charges, improving profitability and stronger capital ratios for both banks.

Investment banking performance will also be key at Barclays, which posts figures on Thursday. Analysts at Nomura forecast that Barclays Capital revenues will have fallen 20 per cent year-on-year.

Despite the tougher trading markets, most analysts are predicting pre-tax profits will rise to around 3 billion, excluding fair value gains, up from 2.4bn year earlier.