Next and Kingfisher to report this week

Concerns over the current mood of the UK consumer will be put to the test this week when two of the biggest names in the retail arena – Next and B&Q owner Kingfisher – step forward with figures.

Concerns over the current mood of the UK consumer will be put to the test this week when two of the biggest names in the retail arena – Next and B&Q owner Kingfisher – step forward with figures.

Fashion chain Next has consistently managed to overcome tough conditions and beaten expectations, but recent high street surveys have pointed to slowing sales among retailers and consumer confidence in decline.

Tuesday’s interim results should show profits of £136.6m (€200.1m) for the six months to July 31, up from £123.2m (€180.5m), but a key issue will be whether it has improved like-for-like sales in recent weeks when the weather has been bad.

Industry data from Fashiontrak shows Next continuing to grab market share, while broker Charles Stanley expects Next to make further moves into larger stores that will house the expansion of its childrenswear and home offers.

Signs that activity in the housing market is starting to tail off and a slowdown in consumer spending mean the interim results of B&Q owner Kingfisher on Thursday will come under detailed scrutiny of investors.

If recent like-for-like sales are disappointing then this is likely to cloud strong UK-led growth during the six months to July 31 and profits expected to be in the region of £348.3m (€510.3m), compared with £309m (€452.8m) at the same stage last year.

According to broker Gerrard, investors are also likely to focus on Castorama, the group’s French operations, and possible improvements in this business after the restructuring that has taken place in the past few years.

The recovery of steel group Corus should reach another landmark on Thursday when it posts half-year operating profits of at least £125m (€183.2m), compared with losses of £57m (€83.5m) during the dark days of last year.

A wide-ranging restructuring, coupled with rising steel prices and a sharper commercial focus will have contributed to the vastly improved performance for the group, which was formed from the merger of British Steel and Dutch-based Hoogovens in 1999.

The company is now on the brink of a return to the FTSE 100 Index, although investors are likely to keep up the pressure on the group’s new management by focusing on cost reduction programmes and the current trading situation.

Current trading at fresh foods group Geest will be closely watched on Thursday after it warned in July that turbulence in the supermarket sector could hit sales significantly.

Geest brought forward its trading update in July by two weeks after Morrisons and Sainsbury’s braced investors for a fall in earnings and Marks & Spencer said it was renegotiating deals with suppliers to save more than £100m (€146.5m) a year.

The supplier, which is expected to say that first-half profits have fallen to £15.5m (€22.7m) from £17.8m (€26.1m) a year ago, warned that the impact on sales growth would be felt between July and December.

If results fall short of expectations and the share price drops then takeover speculation could be re-ignited. Icelandic investors Bakkavor have steadily built up a 20% stake this year, but say they have no present intention to make a full bid.

Temporary power specialist Aggreko – a provider of services at Euro 2004 and golf’s US Open tournament – will be under pressure to provide investors with signs of recovery when it unveils half-year results on Thursday.

Profits are likely to be lower – down to £15.5m (€22.7m) from £17.2m (€25.2m) - but this will be partly due to the disruption caused by a restructuring drive that has seen the opening of a new central operations centre in Staffordshire.

The performance in Aggreko’s key North American market should show an improvement on last year’s depressed level – when oversupply hit the sector - although the absence of major utility work and difficult trading in Germany and the Benelux countries will hamper the European division a little longer.

The weak dollar will impact on the results, although it is possible Aggreko may have picked up additional work because of hurricanes in the United States.

Walkabout owner Regent Inns will be hoping for no hangover from a 5.4% slide in like-for-like sales at its branded operations over the past year as it plots a recovery – beginning with the release of its annual results on Tuesday.

That could prove difficult until the group appoints a new chief executive following the unexpected departure of Stephen Haupt, while conditions on the high street remain tough as more consumers opt to drink at home rather than head into town.

Margins are likely to have been squeezed by discounts on drinks that were introduced in an effort to bring more punters through the doors and analysts are forecasting a fall in pre-tax profits to £11.7m (€17.1m) compared with £14.4m (€21.1m) a year ago.

Regent has also signalled that it will cut its final dividend from 3.36p last year to 1.68p.

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