The Week Ahead: Tesco and Marks & Spencer

Published in Investing on 6 January 2012

We'll have news from the Christmas trading season getting into full swing next week.

With the UK's high streets having had a torrid 2011, all eyes are now on the crucial Christmas shopping period. We've already heard of a mixed festive season for Next (LSE: NXT) as the trickle of news commenced this week, and next week it will start turning into a flood.

High street fallers

One of the most keenly awaited updates will be from HMV (LSE: HMV) on Monday. The music chain has been struggling all year and is only still with us because it managed to persuade its banks to throw it an ever more slender looking lifeline. But no one is expecting great news, with forecasts of around an 8% fall in sales on the cards. The future is not looking rosy right now, and this could, sadly, turn out to be HMV's last Christmas in its current form.

Two other strugglers will release trading updates next week too, both on Thursday. Sales at Argos have been pretty poor of late, with its in-store sales model looking ever more dated compared to online shopping. The owner of this once iconic brand, Home Retail (LSE: HOME), is expected to turn in disappointing figures, after the shares have fallen by over 50% this year.

Babies and food

Mothercare (LSE: MTC) is the other one to report the same day, and it has also seen its shares after gloomy first-half results in November. With the price down 75% since the start of 2011, some might be thinking there's a recovery opportunity there, but analysts are expecting to hear of a further fall in revenue.

Looking to some companies that have been doing rather better, we'll see three of our supermarkets bringing us holiday tidings next week, with Morrison (LSE: MRW) starting on Monday, Sainsbury (LSE: SBRY) following up on Wednesday, and Tesco (LSE: TSCO) bringing up the rear on Thursday.

If the coming year turns out as expected, we should be seeing more and more people cutting down on unnecessary expenditure like eating out, so supermarket investments look like being nicely defensive over the next couple of years. And there are 4-5% dividends on offer from them too.

Department stores

We'll hear how Christmas sales at Debenhams (LSE: DEB) went on Tuesday, and hopefully the year to August 2012 will have got off to a decent start. Current forecasts are suggesting a full-year dividend of around 5.5% on the current price of 58p, so the shares might be worth considering.

Marks & Spencer (LSE: MKS) will give us an update too, on Tuesday, and we should get further news on how the company's turnaround plan is going. The share price has slipped over the past few days, as fears of general poor Christmas trading start to grip, and the full year to April is expected to see a fall in profit before things turn back up.

Other high street updates will come from Game Group (LSE: GAME) on Wednesday, with JD Sports Fashion (LSE: JD) and Halfords (LSE: HFD) on Thursday.

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Notable announcements next week:

Monday: Persimmon, XP Power, HMV, Morrison

Tuesday: Dunelm Group, Rathbone Brothers, Debenhams, Development Securities, Marks & Spencer, Smiths News, Topps Tiles

Wednesday: Game Group, Greggs, Hays, Michael Page, Sainsbury, N Brown Group, Supergroup

Thursday: Sandvine Corp, Ashmore, Cape, Computacenter, Hilton Food Group, JD Sports Fashion, Mothercare, SIG, Tesco, Booker, Halfords, Home Retail

Friday: Spectris, Ted Baker

Fool comment on this week's news:

> The Motley Fool owns shares in Tesco.

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