Market watch: New strategy set to dominate Tesco results

TESCO chief executive Phil Clarke’s new strategy for revitalising its core UK business will steal the limelight from the annual results of Britain’s leading supermarket group on Wednesday.

The blueprint for a UK turnaround follows poor Christmas sales that triggered a shock profits warning from Tesco in January. Its trumpeted Big Drop price-cutting campaign launched last autumn is seen as having failed to impress customers. The City expects the company, whose Tesco Bank Edinburgh HQ employs about 500, to confirm thousands of new shop floor jobs in its supermarkets as part of its new investment programme.

Food retailing analysts are looking for underlying earnings of about £2.5bn for the latest financial year, in line with Tesco’s January guidance that profit would be “broadly flat” for the full year.

WH Smith is expected to post resilient interim results on Thursday, with Bank of America Merrill Lynch forecasting a £1m rise in pre-tax profits to £65m. WH Smith’s performance is expected to have benefited from further cost cutting, with staff levels having dropped nearly a quarter in the past six years.

Debenhams also reports interims on Thursday, with broker Citi forecasting profits to have dipped 3 per cent to £125m. The group is expected to say its clothing business has received a boost from lower cotton prices.

Star turn at the retailer in the latest trading period is thought to be the department store group’s Designers At Debenhams labels, which include ranges by John Rocha and Jasper Conran. The group’s Danish Magasin Du Nord business is also thought to have done well.