Week Ahead: Tesco and Sainsbury square up

8th Jun 2012 10:01

Next week will see another instalment in the battle between supermarket giants Sainsbury and Tesco, as both issue trading updates. Broker Jefferies thinks Tesco's first quarter update, out on Monday, should confirm group sales growth of 2.6%, or nearly 4% excluding foreign exchange effects.Tesco's first quarter runs to May 25th so last year's figures will include the boost from the Royal Wedding while this year's numbers will not get much benefit, if any, from the Queen's jubilee celebrations.The broker is assuming a slight improvement in like-for-like (LFL) momentum in most of the geographic regions in which Tesco operates, but the supermarket titan may have to go some to step up LFL growth in the US, where the comparative figures are tough."On a divisional basis we estimate UK retail gains of 2.4%, international to grow by 2.5% (or 6.2% ex forex), and Tesco Bank to advance by 10%. This trajectory of performance would be slightly ahead of our modelling assumptions for the year (as comparables for UK sales soften considerably from here). Given recent currency movements we see little scope for forecast changes at this juncture," the broker opines.Of course, with pundits far and wide suggesting that Tesco has taken its eye off the ball in recent years in its home market, the key number everyone is likely to be looking at is UK LFL sales growth or, more probably, contraction.Jefferies forecasts UK LFL sales will be down 1.3% excluding fuel. Tesco is not used to LFL sales declining, but if Jefferies's forecast is correct then it will at least represent an improvement on the 1.6% slide in the firm's fourth quarter and the 2.3% reduction over Christmas.On the other hand, Nomura is more pessimistic and predicts a LFL decline excluding fuel of 1.7% for the UK, bearing in mind the wet late April/early May weather."Changes to stores (whether on staff levels or on the fit-out) remain in the early stages, but we expect Tesco's step-up in promotional activity to have provided greater trading resilience," Jefferies said.Nomura says it is too early for numbers to be released for the shops Tesco has souped-up as part of its turnaround plan for the UK, but the broker is expecting commentary relating to the implementation of the labour phase of what it calls the "UK reset"."Following the 200-store trial, and using 4,000 specially trained managers, Tesco began the roll-out of its labour investment in late April into 450 large stores. We look for anecdotal updates on the progress of this initiative and potentially others to provide reassurance that the reset remains on track," Nomura said.As for the increasingly overseas operations, Jefferies reckons Europe will see LFL sales rise 0.5%, with Asia flat and the US up 7%.Nomura's predictions are for Europe to be down 0.2% on a LFL basis, Asia 0.4% lower (LFL), and the US up 5% on a LFL basis.Panmure Gordon said it is not looking for any fireworks from Tesco. "We look for -1% like-for-like sales, compared with -1.6% in Q4 [fourth quarter]. We expect International like-for-like sales growth to have improved slightly to 0.5%, with the US ahead by mid-single digits (against tough comparisons)," Panmure Gordon said.The same broker thinks Sainsbury's headline numbers will look a lot better than Tesco's, especially as Sainsbury's figures will include the benefit of the jubilee week-end. "We look for like-for-like sales growth of just over 2% (ex-fuel), compared with 2.6% in Q4 and 1.0% in Q1 last year. This would equate to similar two year growth to that achieved in Q4 (excluding the impact of VAT)," Panmure Gordon said.Monday June 11INTERIM DIVIDEND PAYMENT DATELok'n Store GroupINTERIM EX-DIVIDEND DATEBarloworld Ltd.INTERNATIONAL ECONOMIC ANNOUNCEMENTSHarmonised Competitiveness Indicators (EU) (09:00)FINALSFirst Property Group, Flybe Group, Latchways, Software Radio TechnologyAGMSAshley (Laura) Holding, Graphite Enterprise Trust, Hansteen Holdings, Roxi Petroleum, Trader Media East Ltd GDR (Reg S), Walcom Group (DI), Zhejiang Expressway Co 'H' SharesFINAL DIVIDEND PAYMENT DATECookson GroupFINAL EX-DIVIDEND DATECompagnie de St-Gobain SATuesday June 12INTERIMSGooch & Housego, Pressure Technologies, Terrace Hill GroupINTERNATIONAL ECONOMIC ANNOUNCEMENTSImport and Export Price Indexes (US) (13:30)Treasury Budget Statement (US) (19:00)FINALSCarclo, CML Microsystems, Eckoh, Findel, Kewill, Oxford Instruments, Park Group, Record, RPC Group, Vianet Group, Workspace GroupANNUAL REPORTNational Grid, Software Radio TechnologyIMSSTed BakerAGMSAdvanced Medical Solutions Group, Andrews Sykes Group, Brainspark, DDD Group, Densitron Technologies, Dexion Trading Ltd., Eastern Platinum Ltd (DI), Eden Research, Eurasian Natural Resources Corp., Gem Diamonds Ltd. (DI), Impellam Group, Petroceltic International, Premier Farnell, Steppe Cement LtdTRADING ANNOUNCEMENTSDolphin Capital Investors LtdUK ECONOMIC ANNOUNCEMENTSIndustrial Production (09:30)Manufacturing Production (09:30)RICS Housing Market Survey (09:30)FINAL DIVIDEND PAYMENT DATEBwin.party Digital Entertainment, Inchcape, Shaft Sinkers HoldingsWednesday June 13INTERIM EX-DIVIDEND DATEBank of Georgia Holdings, Shaftesbury, Sherborne Investors (Guernsey) 'A' Shares, Topps Tiles, WH SmithQUARTERLY PAYMENT DATEUnileverQUARTERLY EX-DIVIDEND DATEXP Power Ltd. (DI)INTERNATIONAL ECONOMIC ANNOUNCEMENTSBusiness Inventories (US) (13:30)Consumer Price Index (GER) (07:00)Crude Oil Inventories (US) (15:30)Industrial Production (EU) (10:00)Manufacturing Inventories (US) (15:00)MBA Mortgage Applications (US) (12:00)Producer Price Index (US) (13:30)Retail Sales (US) (13:45)Retail Sales Inventories (US) (15:15)GMSBlue Planet International Financials Investment Trust, Bullabulling Gold Limited (DI)FINALSAdvanced Computer Software Group, Creston, Hyder Consulting, SepuraIMSSSpirit Pub CompanyAGMSAntofagasta, Christie Group, Dexion Absolute Ltd. GBP Shares, Dexion Equity Alternative Ltd., Diamond Circle Capital, Flying Brands Ltd Units, LiDCO Group, London Security, Mariana Resources Ltd., Matrix Income & Growth 4 VCT, Metals Exploration, Networkers International, Polymetal International, President Petroleum Co, Severfield-Rowen, Soco International, Source BioScience, WPPTRADING ANNOUNCEMENTSSainsbury (J)FINAL DIVIDEND PAYMENT DATECentricaFINAL EX-DIVIDEND DATEAcal, Aegis Group, Alliance Pharma, Amiad Water Systems Ltd, Ashley (Laura) Holding, Camellia, Densitron Technologies, Edinburgh Inv Trust, Empresaria Group, Hargreave Hale AIM VCT 2, Investec Structured Products Calculus VCT, Investec Structured Products Calculus VCT 'C' Shares, London & Stamford Property , Mears Group, Prezzo, Prime People, Printing.com, RIT Capital Partners, Speedy Hire, Tribal Group, Vertu MotorsThursday June 14INTERIMSRedhall GroupINTERIM DIVIDEND PAYMENT DATEAberdeen Asset ManagementINTERNATIONAL ECONOMIC ANNOUNCEMENTSBalance of Payments (US) (13:30)Bloomberg Consumer Confidence (US) (14:45)Consumer Price Index (US) (13:30)Continuing Claims (US) (13:30)Current Account (US) (13:30)Initial Jobless Claims (US) (13:30)FINALSAtkins (WS), Carphone Warehouse Group, Halma, Mulberry GroupANNUAL REPORTGlobal Brands S.ASPECIAL DIVIDEND PAYMENT DATEAntofagastaAGMSAfferro Mining Inc (UK Reg), Alexander Mining, Bond International Software, Bumi, Charlemagne Capital Ltd., Dignity, East Balkan Properties, Elderstreet VCT, Highland Gold Mining Ltd., Investors Capital Trust 'A' Shares, Investors Capital Trust 'B' Shares, Kingfisher, Lifeline Scientific Inc. (Reg S), M&C Saatchi, Marwyn Management Partners, Matra Petroleum, Morrison (Wm) Supermarkets, X5 Retail Group NV GDR (Reg S)TRADING ANNOUNCEMENTSIG Group HoldingsFINAL DIVIDEND PAYMENT DATEAntofagasta, Compagnie de St-Gobain SA, Tandem GroupQ1Premier FarnellFriday June 15INTERIM DIVIDEND PAYMENT DATEBaronsmead VCT, Baronsmead VCT 2, British Empire Securities & General TrustQUARTERLY PAYMENT DATECanaccord Financial Inc., Canadian General Investments Ltd., Carnival, Energy XXI (Bermuda) (Di)INTERNATIONAL ECONOMIC ANNOUNCEMENTSBalance of Trade (EU) (10:00)Capacity Utilisation (US) (16:15)Industrial Production (US) (16:15)U. of Michigan Confidence (Prelim) (US) (15:00)Wholesale Price Index (GER) (07:00)AGMSAfrican Mining & Exploration, Albion Development VCT, Albion Development VCT 'D' Shares, Biofutures International, Cupid, Hellenic Telecom Industries SA ADSUK ECONOMIC ANNOUNCEMENTSBalance of Trade (Trade Balance) (09:30)UK Trade (09:30)FINAL DIVIDEND PAYMENT DATEAdvanced Medical Solutions Group, Carillion, Chime Communications, Computacenter, Derwent London, G4S, Gresham House, Neptune-Calculus Income & Growth VCT, Persimmon, Robert Walters, SDL, Ted BakerQ1OJSC Magnitogorsk Iron & Steel Works GDR (Reg S)