Curry updates to highlight recent rate hikes

Updates and results from Curry’s owner DSG International and property website Rightmove will bring the impact of recent interest rate hikes back into focus this week.

Currys owner DSG International will be the latest retailer to update the market on the impacts of the poor summer weather and rising interest rates on trading on Thursday.

Nick Bubb, retail analyst at Pali International, predicts that like-for-like sales should have shown a modest rise in the first 16 weeks of the year – up 4% in the period compared to a 5% rise last year.

Despite the tough comparatives of the World Cup, flat screen television sales are set to have remained strong, while the poor summer weather may have brought forward sales typically associated with Autumn trading.

European sales look to have benefited from a strong performance in air conditioning equipment and fridges following the very hot summer in countries such as Greece, although continued weak economic conditions in Italy will hinder a recovery at UniEuro.

DSG, which also owns PC World and Dixons Online, has suffered from poor trading conditions in France and Italy and has now exited its French operations – PC City. It also took a hit after it uncovered a “significant fraud” at its French warehouse operations Pixmania.

The company’s chief executive John Clare is stepping down in September and his replacement, John Browett, formerly of Tesco, will not be joining the firm until December.

Analysts’ are expecting pre-tax profits to rise to around £330 million in the year to the end of April 2008, up from underlying profits of £295.1 million last year, with the slowdown in consumer spending following recent interest rate rises due to make for difficult trading conditions in the UK.

The housing market will be back in focus when the UK’s leading property website Rightmove reports its half-year results on Friday.

The housing market has proved increasingly resilient in the face of rising interest rates in the UK and Rightmove’s results are widely expected to show continued strength.

But recent figures show tentative signs that the five rate hikes since last August are cooling the market. Data from the Royal Institution of Chartered Surveyors said inquires from new buyers dropped at the fastest rate since August 2004 during July, while the number of unsold properties on surveyors’ books rose to the highest level since the beginning of the year.

Analysts at Shore Capital Stockbrokers see limited downside risk to Rightmove’s performance, however, due to its subscription based business model.

Fees will be looked at for some clue as to whether agents are still prepared to pay the high multiples seen last year.

More than 80% of UK estate agents advertise through Rightmove, while the website also hosts new home developments, rental properties and properties for sale overseas.

In a trading update in July, the Milton Keynes-based company said website traffic rose by 58% to 24.3 million hits per month in the six months to June 30, while year-on-year subscribers, including estate agents, housing developers and lettings agents, rose by 26% to 18,515.

Analysts’ consensus forecasts put underlying pre-tax profits for the half year at £29.9 million, up from £17.7 million last year.

The City will be eyeing any news from Mecca Bingo owner Rank on the impact of the recent smoking ban in England on trading at its bingo halls when it posts its interims on Thursday.

The company saw like-for-like sales drop 14% when the ban was first introduced in Scotland last year, but said in June that sales had dipped just 5% in the weeks following the ban in Wales, where it has three clubs.

The figures this year will deal with tough comparatives due to the fact that the Scottish smoking ban was only introduced half way though the same period last year, although revenues in Scotland are set to have picked up post the anniversary.

Like-for-like Bingo revenues were up 3% in England and Wales, while its Grosvenor Casino chain grew revenues by 4%.

The smoking ban has the potential to hit revenues and profits across Rank’s business, but changes to casino gaming duty are also set to knock profitability, although analysts say this has been largely factored into forecasts.

Analysts are expecting pre-tax profits of £26.7 million in the six months to June 30, up from a restated figure of £21.9 million last year.

The company has transformed the business over the past year, after it sold off its Hard Rock Cafe chain to the Seminole Tribe of Florida, as well as its DVD replication business and US Holidays arm to focus on its gaming operations.

Drinks giant Diageo is due to post a solid set of full year results on Tuesday.

The world’s biggest spirits brewer, behind brands such as Smirnoff and Baileys, said in a trading update in June that it was on course to report an 8% rise in profitability in the year to the end of June.

Europe is expected to show an improved performance following a significant advertising campaign, while the group’s American operations are set to have benefited from firm growth.

Investors will be looking for news on any improvement in Guinness sales in the UK and Ireland after volumes fell by 6% last year as the hot summer dampened thirst for the black stuff.

At the same time, whisky sales will also be in focus after the firm said it had seen strong growth across its brands which include J&B and Johnnie Walker.

Diageo’s Latin American operations should give the company a further boost after it reported rapid growth in the region, which is one of its highest margin markets.

Credit Suisse analysts expect the group to post pre-tax profits of £2.06 billion for the year, up from £1.99 billion last year.

Diageo holds an estimated 27% share of the global spirits market. Other brands include Gordon’s and Tanqueray gins, Captain Morgan rum and Jose Cuervo tequila.

Pubs and hotels group Whitbread is expected to reveal that Premier Travel Inn has remained the firm’s star performer when its posts its trading update on Wednesday.

Analysts at Barclays Wealth said like-for-like sales should have been maintained at more than 10%, despite strong performance in the same period last year.

Costa has opened around a further 50 outlets during the six months of the year and like-for-like sales are set to show growth of around 5%. The wet weather should also have boosted performance at Costa as consumers opted for hot drinks in lieu of summer sunshine.

Having just recently sold its David Lloyd Leisure chain, analysts also predict that the company may announce details of a return of cash to shareholders. Numis say this could be around £950 million.

Pub restaurants, including the Brewers Fayre and Beefeater chains, are on course to show a slight improvement as refurbished sites have reopened, while the strong focus on food should help mitigate any impact from the smoking ban.

Luton-based Whitbread has streamlined its operations over the last two years after selling its 50% stake in Pizza Hut and its 45-strong chain of TGI Friday’s.

The soggy summer weather may have played havoc with profits in the retail sector, but for travel companies the incessant rain is thought to have been welcome in pushing Brits abroad.

Thomas Cook is expected to confirm this trend when it gives an update on Friday, with the market anticipating a more cheery take on recent performance than its June report, when it said UK summer bookings were off 5%.

The group, which merged with rival MyTravel in early June, said conditions were “challenging” in several of its markets in the last update, which followed just a day after it announced plans to axe up to 2,800 jobs.

Thomas Cook was suffering amid higher fuel costs and the doubling of UK Air Passenger Duty in April. These price pressures are not expected to have eased, but the group stands to benefit from a number of more beneficial trends in recent weeks.

David Pope, analyst at Brewin Dolphin Securities, said Thomas Cook should find the comparatives kinder on summer trading. Last year saw not only hot weather dampen demand for foreign holidays, but also the football World Cup and the August airport security alert, which significantly affected the travel market.