UK retailers ready to show effects of good summer

Debenhams should reap a sales boost from the impact of the warmer summer on seasonal fashion lines when it updates on recent trading tomorrow

Debenhams
Debenhams

The focus on the retail sector will continue next week, with updates due from Debenhams, JD Sports Fashion and French Connection.

Debenhams should reap a sales boost from the impact of the warmer summer on seasonal fashion lines when it updates on recent trading tomorrow.

The department store chain will report back on trading since late June, with surging temperatures expected to have lifted sales after a weather-hit spring.

The update, which comes ahead of full annual results due out next month, follows a lacklustre March-to-June period for the chain of about 240 stores.

Like-for-like sales were flat as freezing temperatures and weak consumer confidence kept shoppers away and left seasonal clothing lines stuck on its shelves.

But analysts at Nomura expect Debenhams to post underlying sales growth of 2.1% for the year to the start of September, as improved recent trading helps compensate for the spring slump.

Nomura cited recent research from consultancy Kantar which suggest Debenhams’ clothing sales have “rebounded sharply”.

They said: “Given that Debenhams generates just under half of its sales from clothing, we expect this data to be indicative of better trading although it cannot provide a full picture.”

Looking ahead, Nomura warns that a resurgent Marks & Spencer poses challenges for the retailer, after its rival’s star-studded autumn/winter clothing launch.

For the full-year, analysts on average see the chain’s pre-tax profits dipping to £153m from £158.3m a year earlier.

Sportswear retailer JD Sports Fashion is set to report a slow path to recovery in its Blacks and Millets outdoor division when it posts first-half results on Wednesday.

The group, which bought the brands out of administration for £20m in January 2012, recently warned of first-half losses from outdoor in the six months to August as the turnaround has taken longer than expected.

The retailers, which sell camping and walking gear, had to sacrifice margins in order to achieve a positive like-for-like sales figure, with the return to profitability still a “work in progress”.

Online fashion firm ASOS is expected to report back on more solid trading on Thursday after recently notching up its best UK sales growth in four years.

The appeal among its core twenty-something customer base has shown no signs of waning, with the firm reporting a 39% leap in UK sales and 48% hike in international revenues over its third quarter to May 31, driving a 45% hike in total retail sales.

An overhauled summer range is likely to have provided a boost to first half trading at fashion retailer French Connection as the group’s revival plans begin to pay off.

The chain, which reports half-year figures on Wednesday, recently revealed “broadly flat” UK and European retail like-for-like sales in the first quarter - a marked recovery from the 7% plunge in the previous financial year.

Analysts are expecting a further pick up in the second quarter.

Housebuilder Redrow will report a year of soaring trading on Wednesday as it capitalises on a housing market fuelled by state stimulus schemes.

The Flintshire-based builder has already flagged 12 months of surging revenues, which rose 26% to £604.8m in the year to the end of June.

Analysts on average expect pre-tax profits to climb to £65.7m from £43m a year ago.

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