The week ahead: Greggs, Dunelm, WH Smith

by from interactive investor |

Results from the retailers hardly inspire confidence, so there'll be nerves as another trio try to buck the trend, writes Lee Wild.

Monday 8 October

Trading Statements

Angling Direct, RPC Group, Bioventix

Tuesday 9 October

Greggs

Bad weather made for a grim start to the financial year at former star food chain Greggs. Warning in May that annual profit was unlikely to be any more than the year before hurt confidence, but the half-year update gave hope that business had not deteriorated any further. That will also be a reasonable outcome at these third-quarter results. 

Greggs must at least confirm that underlying pre-tax profit will be £81.8 million or thereabouts in 2018. Anything less will be unacceptable. That will very much depend on like-for-like sales, which were running at around 2% at the half-year stage versus just 1.3% at the beginning of the year. 

Further strong cash generation and evidence that heavy investment to switch from a regional to national supply chain is paying off, should go down well.    

Trading Statements

LiDCO Group, Greggs, St Ives, YouGov, Transense Technologies, Mysale, Ceres Power

Wednesday 10 October

Trading Statements

Walker Greenbank, PageGroup, Genel Energy, Marston's

Thursday 11 October

Dunelm

Brexit concerns, extreme weather and weak consumer confidence continue to cause havoc across the retail sector. Former clothes chain star Ted Baker is down on its luck, and DFS Furniture has seen a worrying drop off in demand for its sofas. That doesn't bode well for Dunelm, once a favourite among homeowners looking for cheap cushions and bits for the house. 

Full-year profit fell 6.7% to £102 million, but chiefs told us last month that Dunelm had traded in line with expectations during the first-quarter. Confirmation that this trend has continued will be crucial given slip-ups are being severely punished. A valuation of 12 times earnings estimates is undemanding, and a dividend yield of 5% attractive.

WH Smith

WH Smith shares are down 12% since last year’s peak, but the positive trend begun in 2012 remains intact. Its success is down simply to expansion of a popular format across train stations, airports and motorway service stations, not just in the UK but worldwide. Five weeks ago, we heard that the travel business continued to ‘perform strongly’, and there is still plenty to go for here.   

Little is expected of the high street stores, and at least they’re doing no worse than forecast. As long as costs fall and margins grow, the business will remain on an even keel. Valuation has been an issue at Smiths, and the shares still trade on 18 times forward earnings. The travel division must maintain strong growth and the high street chain remain stable to justify these lofty multiples. 

Trading statements

Moneysupermarket.com, Mondi, Hargreaves Lansdown, Hays, Jupiter Fund Management, Dunelm, Volution Group, WH Smith

AGM/EGM

Artemis Alpha Trust

Friday 12 October

Trading statements

Ashmore Group, Produce Investments

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