Next week on the stock market

Among the FTSE 100, FTSE 250 and selected other companies scheduled to report next week:

• Next sets the bar for Christmas retail expectations
• Morrison should benefit from the hospitality shutdown, but the impact of limits on Christmas socialising is less clear
• Marks & Spencer will be leaning heavily on its Food business over Christmas, with the Ocado partnership worthy of particular attention

FTSE 100, FTSE 250 and selected other stocks scheduled to report next week

*Companies on which we will be writing research.

Next – Nicholas Hyett, Equity Analyst

Next is typically the first out of the gate when it comes to Christmas trading updates, and this year is no exception.

The last-minute closure of shops as the South East of England entered Tier 4 restrictions just before Christmas won’t have done sales any favours. A raft of other areas saw shops shut from Boxing Day – disrupting traditional boxing day bargain hunting. With rivals such as Topshop and Debenhams folding, clearly the outlook for the high street is not pretty.

However, Next has the advantage of a well-established online business to fall back on. Online growth more than offset lower store sales in the third quarter, repeating that trick over the festive season when stores were shut altogether might be asking a bit much.

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WM Morrison – Nicholas Hyett, Equity Analyst

Morrison, like all supermarkets, has been able to trade throughout the lockdown. However, what impact the limit on Christmas celebrations this year will have had is unclear.

On the one hand, the closure of bars and restaurants across many regions boosts home consumption. On the other, the limits on at home social gatherings over the Christmas period is likely to have restricted spending.

Having said at the beginning of December that “2020/21 underlying profit before tax and exceptionals . . . [were expected] be in line with . . .[company] expectations” we suspect management will be hoping Christmas was relatively uneventful.

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Marks & Spencer – Nicholas Hyett, Equity Analyst

Last financial year Marks’s Clothing & Home business accounted for 31.5% of total sales. It will be significantly less this year.

Online growth is failing to offset declines in Clothing & Home sales at bricks and mortar stores. The trials and tribulations faced by rivals such as Debenhams and House of Fraser, whose department store type format is similar to M&S, does not bode well. However, as stores close that should concentrate what sales remain among the survivors – so perhaps not all bad news. With closing down sales in full swing across the high street we won’t see any of those benefits in these numbers though.

There is better news in Food, which is holding its own despite the reduced footfall on high streets, and declines in the on-the-move category M&S is perhaps best known for. The partnership with Ocado is worth watching – with Ocado’s UK retail business showing significant growth in the first half.

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Unless otherwise stated estimates are a consensus of analyst forecasts provided by Refinitiv. These estimates are not a reliable indicator of future performance. Past performance is not a guide to the future. Investments and income they produce can rise and fall in value so investors could make a loss.

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