Scott Reid: Interesting results week in store for major retailers

Tesco's half-year results, due tomorrow, are likely to reflect a tougher period for the UK's number one grocer.

The chain's first quarter was particularly poor, with UK sales growth almost grinding to a halt as the group wrestled with plunging food inflation.

Analysts are expecting some sales improvement in the second quarter, while market forecasts for pre-tax profits show a rise to 1.6 billion, compared with 1.42bn a year earlier.

The supermarket faces one of its biggest management upheavals, with chief executive Sir Terry Leahy stepping down after 14 years with the business in March. He will be replaced by international and IT director Philip Clarke.

Meanwhile, analysts have predicted nearly 3 per cent like-for-like growth for Sainsbury's in the second quarter, ahead of the company's own expectations of 2 per cent and up on the 1 per cent growth it saw in the first quarter.

The City will be hoping for payback from the retailer's investment in non-food sales and in store space expansion, as well as news on current trading following a re-launch of its upmarket range.

Andrew Gwynn, research analyst at Merrill Lynch, said: "Recent market share data for Sainsbury bodes well, suggesting that the group is currently trading ahead of our expectations, albeit, trading lifted more by inflation than volume growth."

High street icon Marks & Spencer posts its latest trading update on Thursday, and the City will be looking for indications as to where new chief executive Marc Bolland plans to take the business.

Bolland arrived in May as a chief executive with a formidable reputation, having led a turnaround of supermarket group Morrisons during his tenure there.

In its first quarter, M&S posted a rise in UK same-store sales of 3.6 per cent, with food up 1.5 per cent and general merchandise ahead 6 per cent.

Analysts said this strong performance was sustained in the second quarter, and possibly even strengthened further.

Geoff Ruddell, an analyst at Morgan Stanley Research Europe, has forecast like-for-like sales growth of 3.5 per cent in both food and general merchandise.But he said the strong performance makes any radical changes in strategy from Bolland very unlikely.

He said: "When M&S Food was haemorrhaging share and profitability, we thought that there was a high chance of M&S's new chief executive taking radical action to reposition the business.

"However, with M&S currently gaining market share in both food and clothing, we think that few shareholders would now welcome a kitchen-sinking exercise."

Fashion label and retailer Ted Baker is expected to deliver a strong set of half-year results on Thursday after its spring and summer ranges boosted sales.

The designer brand invested heavily in its product ranges throughout the financial crisis, and the strategy is starting to pay off with growth in retail sales in the UK and US.

It posted a 10 per cent increase in like-for-like sales in the first quarter. Its wholesale business moved into the positive territory in the first quarter, after double-digit declines for two years, while the company continues to expand its footprint.

A boost to business from the World Cup is expected to lead to a slight increase in full-year profits for online gambling business Sportingbet on Wednesday, but the City will be more focused on potential takeovers at the firm.

After two years of negotiation, Sportingbet earlier this month agreed with the US department of justice to pay $33 million (21m) to settle a US investigation into alleged illegal internet gambling.

It means the firm, which offers sports, casino and poker gambling online, will avoid being prosecuted in the US for accepting online bets made by Americans.