Thursday preview: Morrisons, Home Retail

7th Sep 2011 14:48

Fast growing supermarket chain Morrisons releases interim results, and broker Nomura Securities thinks the group's marketing campaigns such as Biggest Ever Price Crunch and Fuel Britannia will have gone down well with "austerity Britain". The broker reckons the company will unveil 2.0% growth, or better, in first half like-for-like (LFL) sales, excluding fuel and value added tax, compared to the first half of 2010. "With the benefit of a robust top line performance in H1 [the first half], and ongoing efficiencies as Morrison's continues to benefit from a progressive overhaul of its systems and processes, we expect Morrison to grow its EBIT [earnings before interest and tax] by 8% in the first half, leaving the group well placed to meet our full year forecasts (+6%)," Nomura said. "This represents circa 5bps [basis points] of margin progress to 5.3% in H1, although the expansion is closer to c.25bps excluding the dilutive impact of fuel," the broker added. Panmure Gordon is looking for a 1.9% LFL growth in sales from a year earlier, and pre-tax profits of around £440m, up from £412m last year. " Morrison should be able to generate faster top line growth than Sainsbury for the foreseeable future and this in turn should lead to higher dividend growth. However, we think that this growth is less certain than Sainsbury's, given that it depends upon new formats and faster expansion, which is why we are maintaining our Hold recommendation," Panmure Gordon said. The broker goes on to note that Morrison's lack of a reliance in a non-food offering should stand it in good stead, as it is the non-food sales that are hobbling growth at Tesco and Asda. Another big retailer due to update, Argos and Homebase owner Home Retail, might not be so relaxed about tough economic conditions. Citigroup is it expecting it to unveil an 11% fall in like-for-like sales at Argos and 3% fall at Homebase. Catalogue Argos's customers, many of whom are at the lower end of the socio-economic scale, have been feeling the pinch lately.The Bank of England announces its interest rate decision on Thursday, and once again the universal consensus is that the rate will remain unchanged, and that the quantitative easing blunderbuss will be kept in the gun cabinet.Thursday September 08 INTERIMS JSC Sitronics GDR (Reg S), Morrison (Wm) Supermarkets, Premier Farnell, Tikit Group INTERIM DIVIDEND PAYMENT DATE BG Group, British Smaller Companies VCT 2, Dialight, Law Debenture Corp., Rio Tinto QUARTERLY EX-DIVIDEND DATE Virgin Media Inc. INTERNATIONAL ECONOMIC ANNOUNCEMENTS Balance of Trade (US) (13:30) Consumer Credit (US) (20:00) Continuing Claims (US) (13:30) Crude Oil Inventories (US) (15:30) ECB Interest Rate (EU) (12:45) Initial Jobless Claims (US) (13:30) Q2 Premier Farnell GMS Renovo Group FINALS Redrow AGMS Accsys Technologies, Aortech International, Assura Group Ltd., Atkins (WS), Avisen, Carpetright, City of London Group, Dart Group, Energy Technique, Falkland Islands Holdings, Flybe Group, Hampson Industries, Immunodiagnostic Systems Holdings, Matrix Income & Growth 2 VCT, Polar Capital Holdings, Software Radio Technology TRADING ANNOUNCEMENTS Atkins (WS), Home Retail Group UK ECONOMIC ANNOUNCEMENTS BoE Interest Rate Decision (12:00)