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Marks & Spencer and Sainsbury’s are both expected to reveal how tough trading conditions have weighed on their first-half profits later this week.
The supermarket, which reports on Thursday, continues to be affected by slower growth in grocery sales and increasing inflationary pressures.
Analysts at Deutsche Bank expect same-store sales to have risen 1.4% in the second quarter, against 2.3% for the first three months of the year. First-half underlying pre-tax profits are expected to be £244m, against £326m in the previous six months.
The situation looks worse for high street bellwether Marks & Spencer, with the City expecting first profits to be down between 10% and 13% when the retailer reports on Wednesday.
The poor figures comes despite a hard-fought turnaround effort by CEO Steve Rowe, who replaced Marc Bolland in 2016.
Wednesday’s results will be the first chance for analysts to see if new chairman Archie Norman advocates tougher measures to breathe life back into the struggling retailer.
Rowe, with Norman’s input, is expected by analysts to ramp up a store closure programme, which has already seen 53 lossmaking international stores shuttered and 30 UK stores targeted to be closed.
Morning update
It’s a quiet start to what looks to be a busy week (see below).
Marks & Spencer (MKS) and Sainsbury’s (SBRY) both start the week down ahead of results, falling 0.7% to 326p and 0.4% to 234.2p respectively.
WH Smith (SMWH), Morrisons (MRW), Tesco (TSCO) and B&M European Value Retail (BME) also get off to a gloomy start as the retail sector comes under investor pressure, the stocks are down 0.9% to 2,050p, 0.9% to 217p, 0.9% to 177.6p and 0.6% to 410p respectively.
TATE & Lyle (TATE) and Britvic (BVIC) are among the early risers, up 1.9% to 703p and 0.6% to 777p, and Dairy Crest (DCG) is up 0.4% to 609p ahead of results later this week.
The FTSE 100 opens 0.1% down at 7,554.42 points.
This week in the City
Despite a slow start today events pick up pace tomorrow in a busy week for the City.
The latest BRC-KPMG retail sales for October are out tomorrow morning, while there is plenty happening on the London Stock Exchange. Associates British Foods and Imperial Brands puts out there final results, with a trading update also due from Conviviality. Internationally, Coca-Cola European Partners publishes interims and Tyrrells owner Amplify Snacks Group reports third quarter earnings. Outside the stock markets, scandal-hit 2 Sisters reports numbers for its final quarter and full year.
Wednesday brings M&S interims and a trading update from Hilton Food Group, with first-half results from Raisio.
Sainsbury’s interims lead Thursday’s session, with Coca-Cola HBC also reporting third quarter figures and Dairy Crest revealing first-half results.
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