Market Watch: Punch expected to take a hit from slowdown

Wednesday's pre-close update from the UK's biggest pubs group, Punch Taverns, will be scanned nervously for signs of consumer weakness after the end of the World Cup.

In early July, Punch - which has more than 7,100 pubs in total - reported its first sales growth since March 2009 across its managed pubs thanks to the tournament, and despite the England team's poor showing.

The boost helped ease sales declines for the 44 weeks to 26 June to 2.7 per cent against 3.4 per cent after 28 weeks as drink-focused firms such as Punch, Enterprise Inns and JD Wetherspoon prospered at the expense of their more food-led rivals such as Mitchells & Butlers.

But Punch has warned of the impact on consumer confidence of the crackdown unveiled in June's emergency Budget, while the sunny weather which also helped trading earlier in the summer returned to more typically British form in July and early August.

And the outlook is likely to get tougher, as the firm warned the VAT hike to 20 per cent looming in January would "put further unnecessary pressure on the pub trade" and hoped the measure would be "rebalanced in the future".

Punch's support to struggling landlords remains stable at 2 million a month, although a squeeze on drinks margins has kept profits under pressure.

There was better news in July on the firm's balance sheet, which has been strengthened by disposals and debts cut by more than 600m since the start of its financial year.

The world's biggest media and advertising group, WPP, should post decent interim results on Tuesday after a 2 per cent rise in like-for-like revenues during the first five months of 2010.

Analysts at Numis expect the FTSE 100 firm to bounce back strongly compared with the first half of 2009, pencilling in pre-tax profits of 345m against 179.3m a year earlier in the depths of the recession.

Bovis Homes cheered investors in June with plans to restart dividends for the first time in more than two years, and the City will be hoping for more of the same tomorrow at the beginning of a busy week for results from the sector.

But the tone of the group's comments on the outlook will be weighed nervously after a recent spate of bad news.

Bovis, however, said it was operating well in a "subdued" new homes market, with sales prices ahead of its internal expectations. The firm is expected to push up pre-tax profits from 4.8m to 13.1m for 2010 as a whole.

Persimmon takes the stage the following day with its own interim results, which will show a 26 per cent rise in half-year turnover, despite a slowdown in sales prior to George Osborne's austerity Budget in June.

Property website Rightmove follows up with its own figures on Friday after benefiting from the buoyant market earlier this year - enjoying a record month in March and its busiest ever day in April. Investec analyst Gareth Davies expects pre-tax profits up to 24.3m from 18.2m last time.

First-half results from Bloomsbury Publishing on Thursday should show the firm making a good fist of life after Harry Potter following "excellent" trading earlier this year.

Although sales of the boy wizard's adventures no longer cast their magic over results, the company has enjoyed other successes this year with England's Ashes win last summer pushing up sales of the Wisden Cricketers' Almanack, the cricket-lover's bible, while also boosting its specialist division.

The firm is meanwhile profiting from tie-ups with the Royal Shakespeare Company as well as a joint venture in Qatar, which published its first title in April.

Investec expects the firm to grow pre-tax profits to 8.1m from 7.7m for the year as a whole, with a potential boost for Bloomsbury ahead from e-book sales following the launch of the UK Kindle bookstore.

Analyst Steve Liechti said: "Shares look good value given positive trading momentum and the underlying shift to specialist and digital."

Bookmaker William Hill is expected to hold earnings firm after a mixed first half of the year, which saw a betting boom during the World Cup but a slump at major horseracing events.

While the group enjoyed a "very strong" World Cup performance across its retail estate in June - the best in 40 years, according to the bookmaker - this was offset by its worst ever Royal Ascot.