Week ahead: Sports Direct expected to be on earnings ball

Mike Ashley's Sports Direct saw sales and profits soaring
Mike Ashley's Sports Direct saw sales and profits soaring
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The retail sector will be in focus this week as Halfords, Kingfisher, Mothercare and Sports Direct post figures.

Sports Direct is set to inflict more pain on rival JJB Sports on Thursday when it reveals buoyant trading in the run-up to the Olympics.

The group, which has nearly 400 stores and owns brands including Donnay, Karrimor and Slazenger, is thought to have grabbed a bigger market share with the help of an aggressive promotional

Its figures will be in contrast to rival JJB, which recently
issued a profit warning after saying it had failed to gain the boost it expected from the Euro 2012 championships.

The City expects Sports
Direct’s underlying earnings to rise 15.5 per cent to £231 million in the year to April, on revenues up 10 per cent to £1.8 billion.

The strong performance would mean the chain has hit an earnings target of £225m for the year, putting executive chairman and Newcastle United owner Mike Ashley on track to receive eight million shares – currently worth around £24m.

Sports Direct also runs an employee share scheme that is due to give 2,000 staff an
average of 5,000 shares – worth £15,000 – this summer and a further 12,000 shares the following year.

Halfords will also update the City on Thursday, and the group has admitted it made a “very disappointing” start to its first quarter. Like-for-like sales are expected to have fallen 6.8 per cent in the three months to the end of June.

The group, which has 467 stores in the UK and Ireland, has seen its share price almost halve over the past year as high petrol prices cause motorists to use their cars less, hitting demand for car maintenance products.

Wet weather has hit demand for leisure goods such as camping equipment, while car enhancement products, such as sat-navs and stereos, are predicted to be down 16 per cent as shoppers continue to cut back on luxury items.

DIY chain B&Q is expected to reveal the impact of Britain’s wash-out summer weather when parent firm Kingfisher updates on trading.

B&Q was hit hard by the wet weather over Easter as homeowners put DIY and gardening projects on hold, posting a 12 per cent slide in sales due to poor demand for outdoor products and building materials.

Given that the weather has remained dismal since April, Thursday’s update is set to confirm tough trading in the second quarter.

Panmure Gordon analyst Philip Dorgan predicts the wet weather during the first half will leave interim profits down 4.8 per cent at £417m.

Pay and performance will top the agenda when Mothercare faces investors at its
annual meeting on Thursday.

The babycare retailer, which owns the Early Learning Centre, slumped to a £103m loss and saw UK like-for-like sales tumble 6.2 per cent in the year to March.

There are also concerns surrounding the group’s executive pay plans after shareholder body Pirc flagged up “highly excessive” long-term bonus awards.

Pirc is recommending investors vote against the group’s remuneration report after discovering that some directors received between 213 per cent and 373 per cent of basic salary under a long-term share incentive plan.