The retail sector is expected to dominate the coming week as Burberry Group PLC (LSE:BRBY), Marks and Spencer Group PLC (LSE:MKS), Primark owner Associated British Foods PLC (LSE:ABF) and WH Smith PLC (LSE:SMWH) are all due updates.
Aviva, AstraZeneca and Persimmon will also be big names on the corporate calendar.
Macro matters
After last week’s inaction from the Bank of England and the Federal Reserve deciding to taper its bond-buying, there may still be some fall-out but attention must also refocus on new events and data.
Economists at ING were looking towards Westminster for Brexit drama, with the UK reportedly ramping up preparations to trigger Article 16 of the Northern Ireland protocol, which in theory allows either side to unilaterally suspend parts of the deal if it’s causing economic or social dislocation.
“This is now less a question of ‘if’ the government will do this, and increasingly ‘when’. There’s growing talk that this could come at some point in November, once world leaders have departed the UK after the COP26 summit…Either way, this uncertainty will add a further growth headwind to the UK economy this winter,” said ING’s James Knightley.
The UK macro data focus will be on Tuesday’s BRC retail sales numbers and Thursday’s glut, which includes quarterly GDP alongside industrial and manufacturing production, services and trade figures, together with RICS housing data. GDP is expected to be around its peak for now; the profile from here on out is expected to diminish.
The Bank of England revised down sharply its end-year forecast for GDP growth this year and revised it up for next year.
Elsewhere, the big numbers to look at will be US and China inflation, with US producer prices due on Tuesday and the consumer price index figure the day after, while the Chinese figures are due on Wednesday.
The former is “somewhat anticlimactic now”, said market analyst Marshall Gittler at BDSwiss, after the Fed started tapering and the central bank’s chief Jerome Powell admitted that “supply bottlenecks and shortages will persist well into next year and elevated inflation as well”.
So, says Gittler, even if inflation rises further, “what impact will it have on policy? It’s already in the price”.
Thursday is a Federal holiday in the US so the US jobless claims will come out on Wednesday instead.
On the cryptocurrency calendar is a conference on Tuesday held by the Bank of Finland Institute for Emerging Economies (BOFIT).
There will be a panel discussion on central bank digital currency, called ‘digital currencies around the world – what are the policy implications?’
Primark to remain jewel in AB Foods’ crown
Primark owner Associated British Foods PLC (LSE:ABF) is due to release its preliminary results on Tuesday, where the fast-fashion retailer is expected to deliver once again some strong numbers.
The brand has been going from strength to strength even though it’s lacking an online presence, with swathes of faithful shoppers willing to wait for stores to open after lockdown instead of switching to other brands.
“Investors will want to see Primark’s prowess in good stock management continue as avoiding excess discounting has helped protect margins,” said Susannah Streeter, senior analyst at Hargreaves Lansdown.
“Although sales in the Grocery division have appeared to be on the wane, it’s partly because of comparisons to the start of the pandemic when stockpiling was all the rage, so overall the performance has been robust. There will inevitably be worries that supply chain issues could cause a headache, so any signs of particular resilience on this front will be eagerly sought.”
Persimmon in the house
The focus is expected to be on sales numbers as housebuilder Persimmon PLC (LSE:PSN) release a trading update on Tuesday, with most recent commentary from the company in August highlighting 20% growth.
Scrutinising the sales commentary, analysts at UBS in a preview note said: “Considering that last year there was 38% growth, a similar run rate would imply sales rates would be down -13% year-on-year against a tough comparator.
“We don’t expect material changes to guidance at this stage.”
UBS added: “Given positive reporting elsewhere, we think the market will also expect Persimmon to report robust trading conditions. The concern is perhaps more about the future, if house price were to slow down and/or interest rates go up.”
Tasty interims for M&S
Marks and Spencer Group PLC (LSE:MKS) is issuing its half-year results on Wednesday, where the market will want to hear how the retailer is coping with supply chain issues ahead of the key Christmas period.
On Friday, the FTSE 250 group said that almost half of its customers expect to finish their Christmas shopping by the end of November.
Meanwhile, it has seen strong performance in both the apparel (C&H) and food segments.
Analysts at UBS see the level of full price sales remain well above both the market and its own 2019 level.
“We don’t think market is pricing in some dislocation in the market, MKS good position to keep gaining share and higher level of full-price sales boosting profitability,” they commented.
Has the reopening of international travel helped Burberry?
Thursday will come with Burberry Group PLC (LSE:BRBY)‘s interim results, the first update since the announcement that the Versace boss Jonathan Akeroyd will be stepping into Marco Gobbetti’s shoes next year as chief executive.
Analysts at UBS expect to see any comment on the rationale behind the decision in the results, alongside current trading updates as the FTSE 100 luxury designer is “at an important stage of its turnaround story”.
“Sales trends by nationality, especially for the Americans and the Chinese, will drive investor sentiment,” the Swiss bank said.
“The market is not pricing in a success of Burberry’s turnaround story with a LSD sales growth and a below 20% terminal underlying earnings (EBIT) margin, thus reflecting the potential risks to expectations when the new CEO joins the company.”
Europe has also been a weak spot for the company, with store sales well below 2019 levels, but the hope is that the reopening of the travel industry will lure back tourists with deep pockets.
Consensus expects second-quarter like-for-like retail sales to rise 9%, with half-year group EBIT margin of 14.9%.
…But travel levels aren’t enough for WH Smith
Similarly, WH Smith PLC (LSE:SMWH) is also waiting for travel really to get going again to spark a recovery.
Full-year results will reflect another disappointing summer for the airlines and rail sectors, with the newsagent’s, which owns station and airport-based outlets across Europe and the US, already reporting second half sales were down 35% versus two years ago.
Broker Citi expects a loss of GBP61mln but said of greater interest will be the comments about North American travel going forward, average transaction values (ATV) and the impact of rising input costs on the other half of the business on the UK hight street.
Surprising Aviva
Aviva should produce a few nice surprises with its nine-month update on Thursday, according to Citi.
The life insurer is under pressure from activist Cevian Capital to hand out more of the proceeds of its GBP7.5bn disposal programme than the GBP4bn already flagged.
Any big change of strategy by Aviva is unlikely believes the broker, but the speed of the payout might accelerate, the costs savings target raised and dividend target tweaked.
Adverse weather might have affected the underwriting performance and Citi wants reaffirmation of the full year combined ratio guidance of less than 94%.
Big expectations for AstraZeneca
AstraZeneca PLC (LSE:AZN) releases third quarter results on Friday though the market will wait to see whether the drug maker can live up to expectations.
Stockbroker AJ Bell noted a positive outlook for the FTSE 100 stalwart, given the recent performance of the shares despite the weight of the COVID-19 vaccine (which is sold at cost and is overall loss making).
“Shares in AstraZeneca trade at a new all-time high, as if to validate the strategy of chief executive Pascal Soriot, recognise the work the company is putting into its drug development pipeline and thank it for its work on combatting the COVID-19 pandemic,” the stockbroker said in a note.
“Concerns over the company’s US$39bn purchase for cash and stock of America’s Alexon Pharmaceuticals also appear to be easing as a result, as AstraZeneca looks to strengthen its position in the fields of immunology and rare diseases.
“The first-half results back in July also boosted sentiment. M. Soriot raised guidance for 2021 for both sales and core earnings per share and analysts will initially judge the third-quarter results in this context.”
“Analysts and investors will therefore dig behind the headline earnings per share numbers and their first port of call will be total product sales.”
Significant announcements expected for week starting Monday 8 November:
Trading updates: Ultra Electronics PLC
Interims: Argentex Group PLC (AIM:AGFX), Cake Box Holdings PLC (AIM:CBOX), Sirius Real Estate PLC
AGMs: Fidelity Emerging Markets Limited
Tuesday 9 November:
Trading Updates: Direct Line PLC, Persimmon PLC (LSE:PSN), Watches of Switzerland PLC
Interims: 3I Infrastructure PLC, DCC PLC (LSE:DCC), Land Securities PLC, Oxford Instruments PLC (AIM:OXIG), Renewi PLC (LSE:RWI), Warehouse REIT PLC (AIM:WHR)
Finals: Associated British Foods PLC
Economic Data: BRC Shop Price Index (UK), Producer Price Index (US)
Wednesday 10 November:
Trading Updates: Grafton Group PLC (ISE:GFTU), ITV PLC (LSE:ITV), Maxcyte Inc
Interims: Aveva Group (LSE:AVV) PLC, Halfords PLC, Marks and Spencer Group PLC, Piction Property Income Limited, Renold PLC (AIM:RNO), Zoo Digital Group PLC
Finals: Walt Disney Co
AGMs: European Opportunities Trust PLC (LSE:JEO), Hays PLC (LSE:HAS), Newmark Security PLC (AIM:NWT), PCI-PAL PLC (AIM:PCIP), ThinkSmart Limited (LSE:TSL), Thor Mining PLC (AIM:THR, OTCQB:THORF, ASX:THR)
Economic Data: MBA Mortgage Applications (US), Consumer Price Index (US), Initial Jobless Claims (US), Continuing Claims (US), Wholesales Inventories (US), Crude Oil Inventories (US)
Thursday 11 November:
Trading Updates: Endeavour Mining PLC (LSE:EDV, TSX:EDV, OTCQX:EDVMF), Taylor Wimpey PLC (LSE:TW.), Vesuvius Plc (LSE:VSVS)
Interims: 3i Group plc (LSE:III), Assura PLC, Auto Trader Group PLC (LSE:AUTO), B&M European Value Retail SA (LSE:BME), Burberry Group PLC, Great Eastern Energy Corporation Limited, Manolete Partners PLC (AIM:MANO), Mediclinic International Plc (LSE:MDC), Norcros PLC (LSE:NXR), QinetiQ Group PLC (LSE:QQ.), Syncona Limited (LSE:SYNC), Ted Baker PLC (LSE:TED), Volex PLC (AIM:VLX), Young & Co.’s Brewery PLC
Finals: WH Smith PLC
AGMs: Fonix Mobile PLC (AIM:FNX)
Economic Data: RICS Housing Market Survey (UK), Preliminary GDP (UK), GDP (UK), Index of Services (UK), Manufacturing Production (UK), Balance of Trade (UK), Industrial Production (UK), Initial Jobless Claims (US), Continuing Claims (US), CPI (US)
Friday 12 November:
Trading Updates: AstraZeneca PLC (LSE:AZN)
Interims: Castings PLC (LSE:CGS), Intosol Holdings PLC (LSE:INTO)
AGMs: DFS Furniture (LSE:DFS) PLC, Falcon Oil & Gas Limited, Galliford Try Holdings PLC (LSE:GFRD), Redrow PLC (LSE:RDW)
Economic Data: Preliminary University of Michigan Confidence (US)
