As investors begin to wind down for Christmas, attention turns this week to shopping – and the performance of Currys and PC World in particular.
Demand for tablet computers and white electrical goods will help Currys and PC World parent Dixons Retail notch up a robust first-half performance tomorrow as it continues to benefit from the demise of rival Comet.
The group is experiencing its first Christmas period without Comet, which went into administration at the start of last year’s festive shopping season.
Experts have cautioned the outlook may get harder as Dixons has a tough act to follow in 2014 after a significant boost to this year’s results from a lack of competition.
They are expecting UK & Ireland underlying earnings to more than quadruple from £5.6m to around £25m in the first half after a rise of between 8% to 9% in like-for-like sales.
Barclays experts are predicting sales to have risen by as much as 12% in the group’s second quarter.
As well as continued growth in tablet sales, they said Dixons has also benefited in particular from more white goods sales in the wake of Comet’s demise, with these electricals now accounting for close to 30% of its revenues.
Group-wide results are expected to show a reversal of last year’s £22.2m underlying half-year loss, with analysts at Numis Securities pencilling in profits of around £5m.
Dixons figures were dragged lower by its troubled European arm PIXmania, but the group has since offloaded the business, as well as its loss-making ElectroWorld chain in Turkey.
Morgan Stanley experts are predicting a 5% hike in UK Christmas sales and said the year ahead could be boosted by television sales ahead of the World Cup, as well as the launch of two new games consoles.
But they cautioned: “We think most of the strong like-for-like sales growth Dixons has enjoyed over the last 12 months has been Comet-related and are very conscious that this benefit is annualising.”
Embattled outsourcing firm Serco is likely to offer another cautious update on Thursday ahead of its full-year results after recently warning that profits will miss City forecasts.
The group - the subject of a fraud probe on its contract to electronically tag criminals - said last month it was being hit by delays in potential contract awards due to an ongoing Government audit of its work. It said profits for the year will be similar to last year’s £307m, rather than the £325m expected in the market.
Numis Securities analyst Mike Murphy said the outlook for 2014 also looks “very uncertain” as Serco awaits the results of probes after it emerged G4S and Serco overcharged the Ministry of Justice for electronically monitoring offenders, some of whom were found to be dead, back in prison or overseas.
As well as a government review, the Serious Fraud Office has also opened a criminal investigation.
The tagging contracts held by Serco and G4S will be handed to rival firm Capita on an interim basis by the end of the financial year, with Capita in the running to take on the work permanently later in 2014.
Last month, Serco chief executive Christopher Hyman resigned as the firm attempts to rebuild its relationship with the Government. Murphy said Serco’s ability to win new contracts will continue to be significantly impacted next year, while an ongoing clampdown on government spending will add to its woes.
The market will be keen to hear if there has been a recovery in Serco’s America’s division following the resolution of the US budget talks and partial shutdown of Federal Government services.
Serco, which runs a vast range of services from prisons to rail services, has seen its shares tumble by a quarter over the past six months as the full extent of the tagging scandal has emerged.
The group has also faced accusations of fraud in its £285 million prisoner escorting service and allegations that Serco employees recorded inmates as having been delivered ready for court when in fact they were not.
Transport group National Express will reveal on Tuesday how trading has fared since an impressive third quarter when it saw record numbers of passengers over the August bank holiday.
The group delivered a 9% rise in UK coach revenues in its core express business as demand for late summer getaways fuelled a surge in airport journeys.
National Express, which operates coach, bus and rail services in the UK as well as Europe, North Africa and North America, said overall revenues grew 5% in the third quarter, and confirmed it was on target to deliver full-year growth.
Since then, the group has been shortlisted to bid for the ScotRail franchise, which operates 95% of passenger train services in Scotland linking all the major cities.
It already operates c2c, which runs services in east London and south Essex, serving 26 stations.
In October, National Express was also shortlisted to run the Berlin Ringbahn, the rail line around Berlin.
Analysts at Bank of America Merrill Lynch recently said National Express was a “sensible investment in a sector that is out of favour”.
They said it had strong growth potential in its international markets, in particular Spain and Morocco.