Our regular look at the FTSE 350 and a selection of other companies reporting from 02 – 06 October.
- Can Boohoo return to growth?
- Greggs has set itself a high bar of late – can it deliver?
- Tesco investors will assess if price promotions continue to pay off
- Environmental standards loom over Pennon
- Will the glass remain half full for J D Wetherspoon?
Boohoo Group, Half Year Results, Tuesday 3 October
Aarin Chiekrie, equity analyst, Hargreaves Lansdown: “Boohoo LON:BOO was having a tough time in the last update, with full-year revenue down 13% to £1.8bn ignoring exchange rates. Sales declined across all regions, most notably falling at double-digit rates in the USA, which is seen as the group’s route to major growth. Investors are looking forward to hearing whether Boohoo’s managed to stem the bleeding in next week’s half-year results, as well as how and when the group plans to return to growth.
With revenue expected to decline between 10-15% in the first half, Boohoo’s going to have to streamline its operations if it wants to keep full-year profit targets on track. Falling goods cost inflation and much lower shipping costs should provide a slight tailwind too, easing some of the pressure on margins. A small net cash position at the last count means there’s no immediate cash crunch and gives some wiggle room to turn things around. But, if active customer numbers continue falling, it’ll be very hard to drive profits in the right direction again.”
Greggs, Q3 Trading Statement, Tuesday 3 October
Matt Britzman, equity analyst, Hargreaves Lansdown: “Greggs LON:GRG has earned a reputation for delivering strong results of late, so next week’s third-quarter trading update is expected to follow that trend. An update on costs would be welcome, given last analysts heard things were improving, with 7% like-for-like growth expected over the second half, compared to 11% in the first. If that trend remains, there could be some leeway for Greggs to ease its own price hikes and keep the offerings in that sweet value spot.
The direction of travel looks promising with several growth levers, including bolstering delivery services through its partnership with Just Eat. Click and collect has further potential, and by opening later the company plans to attract more evening customers. But a high bar’s been set, so investors will be looking for positive progress reports across the range of growth initiatives.”
Tesco, Half Year Results, Wednesday 4 October
Susannah Streeter, head of money and markets, Hargreaves Lansdown: “Tesco’s LON:TSCO razor-sharp focus on keeping prices down is helping it fend off rival discounters, which should bode well for its half year numbers. The retailer’s huge scale is helping to power its value offering and the deep-rooted nature of its supplier relationships is ensuring it can stay super-competitive.
Industry data has shown that Tesco’s market share edged up in the 12 weeks to mid- August, which should help the grocer maintain momentum from the first quarter when like-for-like sales were up 9.9%. Shoppers who remember to set out with the Tesco loyalty card tucked into wallets or on their smartphones are big beneficiaries of lower prices, while those who forget to go armed are punished with much higher bills at the tills.
Expanding the Aldi price match promotion has also been paying off, enabling Tesco to retain shoppers’ loyalty and discourage them from going elsewhere and investors will want to see this trend continuing. Inflation remains arguably the biggest headwind, and with some commodity prices remaining sticky, sustained relief may still prove elusive.’’
Pennon, Trading Statement, Thursday 5 October
Steve Clayton, head of equity funds, Hargreaves Lansdown: “This Trading Statement comes hot on the heels of news from regulator, Ofwat, that the industry must make rebates of £114m due to underperforming on environmental performance. The update will also come shortly after Pennon LON:PNN, and other companies, set out their business plan proposals for the next regulatory period. Pennon were not amongst the worst performers against environmental standards, but nor were they rated as performing acceptably on these measures. Expect to hear more about Pennon’s plans to reduce leaks and clean up discharges – the company will likely see this statement as a PR opportunity right now. They will also have plenty to say about financial performance and the cost of funding their balance sheet. Pennon have less floating rate and index-linked debt than many water companies, but it is still proving a significant near-term drag on earnings whilst interest rates and inflation are high.
The shares have been weak and, as a result, now offer a yield of around 7.5%, despite a policy to grow the dividend by 2% a year in real terms through the current regulatory period. That yield is now suggesting the market sees a risk of a cut to this payout when the next regulatory price review comes into effect. Investors will also be fretting that the upcoming general election could see a more hostile political backdrop emerging for the privatised utilities.”
JD Wetherspoon, Full Year Results, Friday 6 October
Derren Nathan, head of equity analysis, Hargreaves Lansdown: “The most recent update suggests JD Wetherspoon LON:JDW finished its financial year with a flourish, and next week’s full-year results should see like-for-like sales growth around 12.9%. It’s reported that net debt has shrunk by some £200m, to under £700m. Investors will be keen to hear if the Board can now see a path to bringing back the dividend.
Key to this is the outlook for this year and beyond, so analysts will be looking out for a steer on current trading and whether the stronger UK consumer confidence data seen this month is being reflected in food and drink sales at pubs. The Group’s also seen signs of moderating inflation, and eyes will no doubt be looking for more detail around the direction of travel for the cost base.”
This article has been brought to you in association with Hargreaves Lansdown. All opinions expressed in this article are from the analysts and do not necessarily represent the opinions of The Armchair Trader.
FTSE 100, FTSE 250 and selected other companies scheduled to report
| 02-Oct | |
| No FTSE 350 Reporters | |
| 03-Oct | |
| Boohoo Group | Half Year Results |
| Greggs | Q3 Trading Statement |
| 04-Oct | |
| Tesco | Half Year Results |
| 05-Oct | |
| Ferrexpo | Q3 Production Report |
| Imperial Brands | Trading Statement |
| Pennon | Trading Statement |
| Volution Group | Full Year Results |
| 06-Oct | |
| J D Wetherspoon | Full Year Results |
