Results from Somerfield and a clutch of trading statements should keep the beleaguered retail sector in the spotlight this week.
The takeover race for supermarket chain Somerfield moved back into focus last week when it emerged that United Co-operatives, which has 1,000 outlets in the north of England, was no longer interested in making an offer.
But directors are still talking to other potential bidders who are interested in paying the estimated £1.2bn required to land Somerfield.
They are thought to include a consortium involving Icelandic retail group Baugur and property tycoon Robert Tchenguiz as well as a combination of London & Regional Properties and Japanese bank Nomura.
Analysts are hoping Somerfield will give an update on the takeover talks when it unveils its final results on Wednesday, with broker Baird anticipating pretax profits of £58m for the year to 30 April compared with £41.1m last time.
Paul Smiddy, an analyst at Baird, said news of current trading is unlikely to be uplifting because management may have been distracted by bid interest.
Brewer and pubs group Greene King reported a slight sales slowdown last time it updated the market on trading and its final results on Wednesday will be scrutinised by analysts for signs that this is a long-term trend rather than a mere blip.
In April, the Bury St Edmunds-based firm said like-for-like sales at its managed house division were up 1.7% during the 50 weeks to 17 April – compared to the 2.2% growth seen after 36 weeks of its financial year.
Performance at its tenanted and leased pubs weakened, while the rate of growth at beer brands Greene King IPA and Abbot Ale had also slowed.
Fund manager Gerrard is predicting pretax profits of £93m compared with £82.6m a year earlier, but this would not enable Greene King to take part in the current round of consolidation in the pubs industry because its borrowings are too high.
The past 18 months have seen plant hire group Ashtead stage an impressive recovery from a period of financial turmoil, following an accounting blunder at its US subsidiary Sunbelt and a rise in debts linked to its American expansion.
This revival is reflected in a seven-fold increase in its share price and should be confirmed on Wednesday when the group unveils its results for the year to 30 April, with Evolution Securities analyst Hector Forsythe anticipating pretax profits of £23.5m compared to £7.6m last time.
Ashtead, which operates as A-Plant and Tool Hire Shops in the UK, said in March that trading conditions across all its markets were good.
Last month it unveiled a deal to buy five profits centres of a rival to its Sunbelt subsidiary – a move that analysts took as a sign that management were confident in the potential of the US equipment hire market.
Home retail group Kleeneze has been hit by rising start-up costs at its eeZee TV shopping channel and a lower contribution from its Farepak business where households make monthly payments for a hamper at Christmas.
In a trading update two months ago, Kleeneze said its results for the year to 28 April would be below its hopes, leading ABN Amro analyst Simon Davies to cut his forecasts and pencil in pretax profits of £6.7m compared with £8.2m a year earlier.
Swindon-based Kleeneze is scheduled to announce its results on Wednesday and ABN Amro remains positive on its prospects despite the slippage in profits.
Analysts are particularly encouraged by the performance of its internet shopping ventures Kitbag and Iwantoneofthose.com as well as the long-term opportunities for eeZee TV as more households own a Freeview set-top box or switch to digital television.
Tapas restaurant group La Tasca is expected to show the result of a successful few months on the stock market when it updates on its full year on Tuesday.
The Manchester-based group, which runs the largest casual dining Spanish restaurant chain in the UK, boosted its number of outlets by 10 to 50 during the financial year and said in April that trading had been strong.
Analyst Greg Feehely of Altium Securities said La Tasca’s new La Vina chain – which consists of two outlets – could provide an opportunity for faster growth.
He said: “Whilst it is still relatively early days for this brand, we believe that it has significant expansion potential.”
Feehely is expecting adjusted pretax profits to come in at £3.7m against £2.6m.
Investors seeking evidence that the high street slowdown is affecting high street retailers in different ways will pay close attention to a slew of trading updates next week from the likes of Peacock, JJB Sports and Matalan.
Peacock has gone on record as saying it would benefit from any slowdown as consumers check out the discount end of the clothing market.
It will make a statement at the time of its annual meeting on Friday and signs that it has maintained or improved upon the 3.6% same-store sales growth of the year to 31 March would be welcomed by investors in the current retail climate.
In contrast, the last announcement by JJB Sports revealed a 7.7% fall in like-for-like sales during the 16 weeks to 22 May and investors will worry that Wednesday’s update will show things have got even worse as the company benefited last year from the buzz around the Euro 2004 football tournament.
Investec analyst Matthew McEachran said recent TNS market share data showed that out-of-town operators such as Matalan, which is due to update the market on Thursday, had also yet to enjoy a rebound in sales.
References: EGi News 04/07/05
