Among those whose results are currently scheduled to be released next week:
- Marks & Spencer should keep us updated on the evolution of the Gigantic Strategy
- Medium-term demand will be at the center of Vistry’s concerns
- Tesco’s festive market share will be in the spotlight
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Marks & Spencer – Sophie Lund-Yates, Equity Analyst
Christmas is big business for M&S – not only is its premium food offering suitable for holiday shopping, but its larger clothing and home operation is a classic place to shop for gifts. Although this is technically a quarterly trading report, we should get some feedback on how Christmas trading went.
After Christmas, we would like to know how Marks & Spencer’s clothing and home sales are doing. The group is in the midst of a major strategic overhaul, after years of disappointing performance. Tons of work has gone into improving inventory and purchasing processes, proposing products and streamlining the store base. Now is the time to see if the plan has continued to bear fruit.
In the first half of the year, clothing and home sales fell only 1% from pre-pandemic levels, with huge increases in online sales offsetting lower in-store sales.
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Vistry – Sophie Lund-Yates, Equity Analyst
Vistry is the first of the Big Three home builders to report next week. His results will therefore give an indication of what awaits his peers. Home builders in general have come out of the pandemic in much better shape than we feared. To that end, much of our focus will be on seeing that this is the status quo for Vistry next week, rather than looking for specific benchmarks.
It was not until November that the group said it was “firmly on track” to deliver underlying pre-tax profit of Â£ 345million in a full year. We would like to see this target still intact. In part, this will depend on the cost inflation environment, where rising costs affect the entire industry. We believe Vistry will control this as it is able to offset costs through rising house prices. We have heard in recent days that UK house prices continue to hit new highs.
This is good news in the short term, but we’ll be keeping an eye on the outlook statement. Rising prices and rising interest rates could dampen some of the heat in the real estate market. It’s not exactly a crisis in the making at this point, but we wonder if management expects demand to moderate over the medium term.
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Tesco – Sophie Lund-Yates, Equity Analyst
How did this supermarket giant resist German discounters during the all-important Christmas season? That is the question we will be asking next week.
Tesco has done a very good job of standing up to Aldi and Lidl, with lower prices, improved proposals and a rapidly growing online business all playing their part. But we wonder if Tesco’s market share has continued to grow as inflation rises and customer revenues don’t stretch that far.
And speaking of online, we’re going to be looking at this very closely. The group’s ambitions are high because it seeks to capitalize on the permanent increase in deliveries induced by the pandemic. Tesco is investing heavily in new capacity to achieve this. The excitement around this is part of the reason the market is so excited about the action. A price-to-earnings ratio of 13.6 is slightly above the ten-year average and could be susceptible to any missteps.
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