Contrasting fortunes of venerable high street giants

A QUIETER results week is in prospect, with the main spotlight likely to fall on two venerable but highly contrasting high street veteran brand names, Burberry and Mothercare.

Fashion house Burberry is set to report a leap in profits tomorrow but analysts will be watching for signs its stellar sales growth is starting to slow amid darkening economic conditions.

The fashion house, known for its red, black and camel check, is expected to report a 25 per cent rise in underlying profits to £160.8 million in the six months to end‑September.

Burberry has benefited from the rapid expansion of the middle classes in emerging markets, and continued strong demand for luxury goods in the UK and US.

The company has already said bumper sales through its Chinese outlets and flagship stores in London, Paris and New York helped revenues jump 30 per cent to £830m.

But retail analysts wonder whether the slowdown in global growth has reined in its performance, particularly in China.

Burberry has thrived since the onset of the recession as the top end of the market has proved relatively resilient. It has also tapped into overseas demand for UK fashion.

Mothercare’s future in the UK will be at the heart of its half-year results on Thursday, when it will unveil a slide in profits. The retailer, which has 353 UK stores and 969 overseas, recently issued a profits warning after UK like-for-like sales slumped 9.6 per cent in the 12 weeks to 1 October.

The mothers-to-be, babies and children’s business has been kept afloat by its international arm, which saw retail sales increase 16 per cent in the first-half and which plans to open 150 new stores this year. But the problems at the loss-making UK arm have seen the chain’s share price collapse more than 70 per cent since the start of the year, prompting its boss Ben Gordon to step down after nine years with the group.

The City expects Mothercare, which has already announced plans to close over 100 shops in the UK, to report an 80 per cent decline in pre-tax profits to £5.3m in the year to March.

Troubled Swiss banking giant UBS is expected to unveil further job losses at an investors day on Thursday as part of an ongoing drive to cut costs amid increasing global recession fears.

A Swiss newspaper, Tages-Anzeiger, last week claimed UBS could unveil an additional 1,500 lay-offs, after announcing 3,500 job cuts in August, as its investment bank arm suffers from market turbulence.

Telecoms firm TalkTalk is set to reveal tomorrow that it lost more broadband users in recent months despite its efforts to sort out its customer service problems.

Broadband customers have been leaving as a result of disruption around the transfer of former Tiscali subscribers on to its own network and billing system, as well as strong competition from rivals such as BT.

Analysts say that although the technical issues seem to have been ironed out, customer numbers are still expected to fall in the three months to the end of September, although at a slower rate than the 27,000 decline in the previous quarter.

This is despite cutting the price of two of its combined phone and broadband packages to woo new customers.

Analysts predict profits will rise 30 per cent to £91m in the six months to end‑September, despite revenues falling 4 per cent to £848m.

Profits are expected to have grown as it shifts more of its customers on to its own network, which provides higher margins, and as average revenues per user increase.

TalkTalk’s customer service has suffered since it bought Tiscali’s UK arm in 2009. Earlier this year it revealed it had paid £2.5m in compensation to customers who received bills despite cancelling the service.