The week ahead: High street Christmas sales likely to prove a little frosty

SPECULATION over the impact of snow and weak consumer confidence on the retail sector will finally end this week with the first of a deluge of trading updates from the high street, including Next and Clinton Cards.

Next delivered a surprise on Christmas trading a year ago, but with snow adding to pressure on household spending the chances of a similar boost in tomorrow's festive sales update seem more remote.

Instead, the fashion chain is likely to have fared better in the post-Christmas sales period, as evidence has pointed to a busier period for retailers with shoppers prepared to bring forward purchases before the January VAT rise.

Tomorrow's trading update only covers the 24 weeks to Christmas Eve and analysts will hope the company provides some additional comment on trading in that crucial sales period, as well as further guidance on margins in 2011.

The company has already warned of little sign of an end to the bubble in cotton prices, with shoppers braced for price tags to rise by up to 8 per cent in 2011.

Disruption caused by the recent snow has made forecasts difficult, but analysts at UBS predict a drop of 4.5 per cent in retail like-for-like sales in the 24 weeks to Christmas Eve.

This includes an already-reported third quarter decline of 3.3 per cent and suggests a fall of about 6 per cent in recent weeks as Next battled tougher comparisons with a year ago, as well as the weather conditions.

Before Christmas, fashion chain Alexon issued a profits warning after it said the icy roads and pavements meant shoppers were unable to reach its stores.

Greetings card retailer Clinton Cards, which owns the Birthdays chain, will face tough comparisons with a year earlier when it reports sales figures from the run-up to Christmas on Thursday.

Like-for-like sales for the Clinton brand in the five weeks to 3 January were 3.6 per cent higher, while the Birthdays performance also continued to improve after an overhaul of its supply chain.

Last year's figures represented a recent high point for the 800-store company as it later disappointed the City with a profits warning. That prompted the company to unveil plans to update "the look and feel" of its Clinton stores, including a new logo, revamped shop fronts and redesigned uniforms.

There are no City forecasts for this week's trading figures, but in October the most recent like-for-like figure for the Clinton estate was 2.9 per cent lower.

This led Numis Securities to lower its profits forecast for the year to July by 1 million to 13.2m, similar to the figure reported last year.

Domino's Pizza is expected to continue its strong performance tomorrow when it updates the City on trading for the final quarter of 2010. The takeaway and delivery company should continue to benefit from the trend of "the big night in", which sees consumers indulging on affordable treats at home rather than heading out on the town.This will have been reinforced by the final of ITV's X Factor, which drew almost 20 million viewers.

And in the last two seasons of heavy snow - January 2010 and February 2009 - Domino's reported high like-for-like sales growth as its scooters continued to make home deliveries.

Douglas Jack, an analyst at Numis, forecasts that Domino's full year pre-tax profits will be up by 22 per cent to 36.5m.