Quiet week ahead on London market

Inflation and unemployment figures and the annual meetings of British Airways and Marks & Spencer should make up for a quiet results schedule on the London market this week.

Experts will take the latest temperature of the fragile UK economy this week as a flurry of data begins on Monday with the delayed second revision of official growth estimates for the first quarter of 2010.

The Office for National Statistics embarrassingly put back the release two weeks ago after spotting “potential errors” in the data, which most economists expect to show GDP growth unchanged at 0.3% for the first three months of the year, down from 0.4% in the previous quarter.

While the pace of growth should accelerate in the second quarter, many experts are eyeing the impact of the savage emergency Budget during the remainder of 2010, with the National Institute of Economic and Social Research (NIESR) saying there is “clearly a risk” growth will falter.

Inflation figures for June will be closely studied on Tuesday after worries from Bank of England rate-setter Andrew Sentance that prices are rising despite the economic slack created by the recession.

Investec’s David Page forecasts the Consumer Prices Index falling from 3.4% to 3.1% – largely down to lower petrol prices more than offsetting smaller discounts in summer sales among clothing retailers. Market consensus is for a slightly smaller drop to 3.2%.

This would leave the CPI at 3% or more throughout the whole of the year so far - well above the Bank’s 2% target – and while Sentance is currently in the minority on the MPC more could come over to his camp if the figures are on the high side.

The latest employment data on Wednesday meanwhile is set to take centre stage amid worries over the impact of the coalition Government’s Budget slashing on employment after leaked UK Treasury data predicting the loss of 600,000 jobs in the public sector over the next five years.

Unemployment increased to almost 2.5 million between February and April, giving a jobless rate of 7.9%, while the number of people classed as economically inactive rose to 8.19 million, 21.5% of the working age population.

Consensus forecasts predict a fifth consecutive monthly fall in the claimant count with a 20,000 decline to 1.46 million pencilled in for June. Not all unemployed persons – such those recently jobless – claim jobseeker’s allowance, while those declaring themselves economically inactive are not entitled to claim.

Marks & Spencer will take its turn in the executive pay spotlight when the retail chain holds its annual shareholder meeting on Wednesday.

Following a clash with investors at last year’s AGM, the high street retailer is on another collision course amid concerns over packages for new boss Mark Bolland and outgoing chief Sir Stuart Rose.

More than a fifth of shareholders who voted last year failed to back Sir Stuart’s re-election to the board over his controversial dual role as executive chairman against City best practice.

With the succession resolved, pay is now in sharp focus after news Mr Bolland was lured from Morrisons with a £15m (€18m) pay deal, while Sir Stuart could pick up £2.5m (€3m) in cash before he leaves next March.

Investor activism has been gaining momentum this year, with Tesco the most recent to be impacted when nearly half its shareholders failed to support its remuneration report.

Pensions advisory group PIRC is recommending that investors vote against the M&S remuneration report because of its “highly excessive” rewards for top brass.

Sir Stuart agreed in March to a 25% pay cut for his final months with the high street giant, but this seems unlikely to ease fears especially as shareholders endured a dividend cut for the first time since 2000 last year.

Mr Bolland’s joining deal has also enraged, despite Sir Stuart’s assurances that to get the best people you have to “pay the market rate”.

M&S played down the prospect of a shareholder blow when it released first quarter figures, pointing out that proxy voting agency Riskmetrics had lent its support to the group over the pay issue.

The trading update may also have helped pacify investor anger as it revealed a better-than-expected 3.6% rise in same store sales – its third quarter of growth in a row.

Lemmings are unlikely to be in attendance at the British Airways annual meeting on Tuesday after gaining star billing last year in union protests against the firm’s leadership and cost-cutting plans.

The animals were hired by Unite but taken away after an RSPCA inspector said they showed signs of “distress” following their unexpected foray into industrial relations.

A year on – following a second successive year of record losses and two strikes which have cost BA around £150m (€178m) – the mood is likely to be calmer as union members vote on the airline’s latest attempt to end a long-running dispute with cabin crew.

Unite has delayed a strike ballot while members consider the offer – which includes two years of guaranteed rises in basic salary from February 2011 - although the union is making no recommendation on the proposed deal.

BA says it addresses cabin crews’ concerns about future earnings and gives a firm commitment that staff could keep current pay and conditions, although the removal of travel concessions from workers who have taken industrial action remains a sticking point.

Further action – particularly in the peak summer season – would be a real blow to the airline, which carried 12.5% fewer passengers in June compared with the same month last year as a result of the second strike.

Although overshadowed by strikes – and the impact of Iceland’s volcanic ash cloud – chairman Martin Broughton will also stress the bright spots of the past year, particularly the progress made on its merger with Spanish carrier Iberia.

When the deal is completed International Airlines Group will have more than 400 aircraft and carry more than 58 million passengers a year. The new group is expected to generate annual cost savings of around €400m by the fifth year of the merger.

Wall Street banks kick off interim results reporting this week in what will be a keenly watched earnings season from the sector.

The recent difficult market conditions have raised the prospect of a tougher second quarter for profits, following the industry’s remarkable bounce back last year from the financial crisis.

The market for takeovers and initial public offerings all but ground to a halt as markets slumped on fears over the global economic recovery. London’s FTSE 100 Index has slumped by more than 12% since April as signs have pointed to a slowdown in economic activity.

This is expected to have hit lucrative fees from these deals in the three months to June 30 and the market is waiting to see the damage on US banking giants when they report, with European and UK banks to follow in subsequent weeks.

JP Morgan Chase reports on Thursday, followed on Friday by Bank of America Merrill Lynch and Citigroup.

One banking analyst predicts that revenues at Goldman Sachs and Morgan Stanley from operations in fixed income, currencies and commodities have fallen more than 30% from the first few months of the year.

Experts are also expecting the European bank results will have faltered in the past quarter, with analysts reportedly predicting a 50% plunge year-on-year in sales, trading and advisory revenues.

Strong comparatives from a year earlier will also have put results under pressure.

But investor hopes were raised after US asset management group State Street said quarterly earnings were expected to easily beat market forecasts – a sign that the sector may have been more robust than feared.

Demand from World Cup-watching football fans in June should provide a tasty topping for first-half results from Domino’s Pizza on Monday.

The group plugged its best-selling Pepperoni Passion pizza on ITV1 before England’s clashes with the USA and Algeria – encouraging viewers to order a pizza before kick off for delivery at half-time – as well as running adverts on radio station TalkSport and online promotions through Facebook.

Alongside the World Cup, Domino’s is likely to have benefited from its Two for Tuesday promotion, faster delivery times as well as favourable comparisons with weaker trading last year.

In its first quarter, the business posted like-for-like sales growth of 10.5% in the 13 weeks to March 28 as the popularity of shows such as X-Factor helped overcome the impact of many stores being forced to close in the winter weather.

Numis Securities analyst Douglas Jack said the interims “should be strong”.

“Whereas our consensus-in-line forecasts assume that like-for-like sales growth slows to 4% in 2010, we would not be surprised if the first quarter’s sales growth was to be surpassed in the second quarter,” he said.

Domino’s also expects savings of £1m (€1.2m) in 2011 following the opening of its new commissary at West Ashland, Milton Keynes providing ingredients to stores. The firm predicts bigger savings in subsequent years.

Consensus interim profits are £16.3m (€19.4m). Across the full year pre-tax profits of £34 million are expected, up from £29.9m (€35.6m) for 2009.

The group’s first UK store opened in 1985 and it now has more than 570 outlets in the UK and Ireland.

Superdry brand owner SuperGroup posts its first results as a listed company on Thursday following a March flotation which initially valued the firm at £400m (€477m).

The company – whose clothes have been worn by stars including David Beckham and Leonardo DiCaprio – has sold nearly a third of the firm to allow directors such as founder Julian Dunkerton to gain a return on their investment, as well as raising £15m (€18m) to fund growth.

Investors so far have had plenty to be pleased about, with shares bombing more than 50% ahead of the initial 500p float price and valuing the overall business - which began life on a market stall in Cheltenham more than 20 years ago – at well over £600m (€715m).

The group’s pre-close update for the year to May said it was “delighted” with the momentum across the business which has seen total sales jump £63m (€75m) to £139m (€165.6m) and UK like-for-likes up 17%.

The company, which trades from 43 UK stores and 56 concessions in House of Fraser, also expects pre-tax profits of at least £25.7m (€31m) as per its pre-float prospectus.

Since then, SuperGroup has signed a franchise agreement with Al Khayyat Investments to open 13 Superdry stores across the United Arab Emirates. It is also bringing in-house the online outlet for its second hand clothing, which will improve profits.

More in this Section

Airbus shares soar in past decade to top €107bn valueAirbus shares soar in past decade to top €107bn value

Philips to sell domestic appliance division to complete move into health technologyPhilips to sell domestic appliance division to complete move into health technology

Boost for motor trade but bar sales remain in doldrumsBoost for motor trade but bar sales remain in doldrums

Ireland is a tech hotspot but rural areas left in coldIreland is a tech hotspot but rural areas left in cold


From Audrey Hepburn wearing a strapless ballerina gown, to Angelina Jolie in a suit, the red carpet rarely disappoints.13 of the biggest fashion moments in Bafta history

You might not be able to dictate when you menstruate, but you might be able to help alleviate some of the symptoms.Can you ‘biohack’ your period?

The American actor never fails to impress with her fashion choices.Blake Lively’s 7 best red carpet moments

Let love bloom with these heartfelt choices. By Hannah Stephenson.5 of the most romantic plants for Valentine’s Day

More From The Irish Examiner