Fashion and housebuilding will be the key focuses of the corporate news diary on Wednesday, with results due from ASOS as well as a trading update from Barratt Developments.
Also scheduled to make an appearance are fishing tackle retailer Angling Direct and recruiter PageGroup, while across the Atlantic third quarter earnings season will roll on with results from banking giants Bank of America Corp (NYSE:BAC), Goldman Sachs Group Inc (NYSE:GS) and Wells Fargo & Co (NYSE:WFC).
ASOS finals in the bag
ASOS PLC (LON:ASC) is releasing its final results on Wednesday, which should not come as a surprise after the online retailer guided for a 17-19% jump in sales to around GBP3.2bn while pre-tax profit should come in at GBP130-150mln.
It is nonetheless set to be a huge increase from last year’s GBP33mln incident after substantial investments in IT, operational issues at its warehouses in the US and UK, poor stock availability and aggressive discounting by competitors.
Investors will look at margins, a weak point in recent years, although fewer returns during lockdown and reduced promotional activity may help.
“The question though is whether these trends will continue in more ‘normal’ market conditions. A jittery economic outlook means it’s possible the sales stickers have been brought out of hibernation,” analysts at Hargreaves Lansdown commented.
“Net debt stood at around 1.8 times cash profits at the last count – more than we’d like. However, the group continues to target being net cash by the end of the year. We’ll be pretty impressed if that’s delivered.”
Conflicting expectations for Barratt
Barratt Developments PLC (LON:BDEV) will provide a trading update on Wednesday after saying early last month that activity in its new financial year has been “encouraging” but that the time was not yet right to return to the dividend list.
In the past week, there has been conflicting information about the housebuilding sector, with analysts at Credit Suisse saying customer demand and house prices look highly unlikely to fade before the end of the year, and that sector valuations were “have not been sustainably cheaper for almost a decade”.
But data from surveyors cast a little doubt on the current ‘mini-boom’ in the UK’s housing market/
The latest poll on surveyors found that while demand and sales in the market remain “firmly positive”, the outlook for sales expectations over the next 12 months “still portray a more subdued outlook further ahead”.
In early September month ago that Barratt reported a 46% decline in annual profits but noted that enjoyed a boom in sales in recent weeks, with an, resulting in net private reservations per active outlet per average week of 0.94 versus 0.68.
A 62% increase in home completion volumes in the eight weeks to August 23 to 1,439 was attributed to a combination of pent-up demand, the Stamp Duty holiday “and an understanding that Help to Buy will only be available to first-time buyers and regional home price caps will exist from April 2021”.
The key to the AGM update, said analysts at Peel Hunt, will be recent trading activity and whether there has been any change to the positive pattern seen in the last few months, including an average 314 net private reservations per week versus 250 per week for the previous year. “We suspect not.”
Anecdotal comments and house price data indicate that there may be some good news on selling prices, while production rates will also be surveyed, though the end of the furlough scheme and a rising second wave in London and the North paints a worrying picture.
Angling Direct reels in results
Fishing tackle and equipment retailer Angling Direct PLC (LON:ANG) will post its interim results on Wednesday after previously reporting a rebound in sales after pent up demand was released following a relaxation of coronavirus restrictions in the UK over the summer months.
However, the figures themselves are unlikely to bring any major surprises for investors, with the company having already reporting half-year revenue growth of 21%, boosted by a 43% rise in online sales during the period.
The outlook is likely to hold more attention, particularly as the company has said it stands to benefit from a trend in ‘staycations’ caused by travel restrictions during the pandemic.
With many countries still keeping their borders closed, investors may want an update on how the group plans to exploit the opportunity, as well as keeping an eye on any potential closure risks as the government mulls renewed lockdown measures during the second wave of infections.
PageGroup likely to reflect shaky jobs market
A trading update from recruitment firm PageGroup PLC (LON:PAGE) may be expected to have some positive surprises, coming a week after rival Robert Walters said it was reinstating its interim dividend.
Like Robert Walters, Page has seen a slowdown in gross profit before the pandemic struck in the first quarter, which led to a harder that than might have occurred otherwise.
In the three months to end-June, Page’s net fee income plunged 47%, with the UK the worst performing region, while for the latest quarter analysts are looking for a 38% decline.
One trend to note will be the mix of activity between permanent and temporary hires.
“When companies feel more confident they are likely to lean toward offering permanent positions while they may prefer to offer only temporary posts during more uncertain times,” said AJ Bell.
Significant announcements for Wednesday October 14:
Trading updates: Barratt Developments PLC (LON:BDEV), Just Eat Takeaway.com NV (LON:JET), PageGroup PLC (LON:PAGE)
Finals: ASOS PLC (LON:ASC)
Interims: Angling Direct PLC (LON:ANG), Applied Graphene Materials PLC (LON:AGM), Randall & Quilter PLC (LON:RQIH), ASA International PC (LON:ASAI)
Economic data: US producer price index