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Next week on the stock market

What to expect from a selection of FTSE 100, FTSE 250 and selected overseas shares reporting next week.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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

  • Sales look healthy at Keywords but margins will be worth checking
  • Will Inditex be back in profit territory?
  • It’s all about what life after lockdown looks like for Next

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

14-Sep
No FTSE 100 or FTSE 250 reporters
15-Sep
Marshalls Half Year Results
Ocado* Q3 Trading Statement
Polypipe Half Year Results
16-Sep
Inditex* Half Year Results
Redrow Full Year Results
17-Sep
Hilton Food Group Half Year Results
IG Group Q1 Trading Update
Keywords* Half Year Results
Next* Half Year Results
Playtech Half Year Results
Spire Healthcare Group Half Year Results
Trainline Half Year Trading Update
18-Sep
Investec Pre-Close Trading Statement

*Companies on which we will be writing research.

Keywords – Nicholas Hyett, Equity Analyst

The coronavirus crisis hasn’t been a completely smooth ride for Keywords. Moving thousands of staff to working from home comes at a cost and some services like game testing just can’t be delivered outside a secure environment.

Having said that, it seems demand for Keyword’s services has remained steady – with underlying sales up 8% in the half. With gaming enjoying a bumper lockdown the future looks bright.

Our real questions at the half year stage all revolve around margins and cash preservation. If the group has managed to keep things ticking over while operating from home and closing some services that will be very impressive. However, while we think Keyword’s long term prospects remain intact, we’ll be surprised if there isn’t some drag on the bottom line.

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Inditex – Sophie Lund-Yates, Equity Analyst

We haven’t been concerned about the Zara-owner’s financial position during this year’s disruption. A cash hoard of over 5bn euros provides significant defence. However, we’ll still be reading the balance sheet with care, to see just how well that cash pile’s doing as shops re-open.

We always pay close attention to the income statement, but this will be even more important next week. Inditex surprised us in its first quarter results when it announced plans to press on with a very expensive optimisation programme, despite the disruption, and this took a hammer to profits. While we can see the logic, it would be good to see if the group’s made progress in the second quarter in climbing out of loss-making territory.

Perhaps unsurprisingly we’ll be looking out for commentary on sales. Lockdowns mean we know the overall numbers aren’t going to be pretty for the first half. But we’re concerned the higher price-points of Inditex’s fashion mean it’s going to take longer for trading to get back to normal levels. A jittery economic outlook is not traditionally when shoppers flock to the higher-end of the value chain, and in June, markets that were fully re-opened saw sales down 16%.

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Next – Nicholas Hyett, Equity Analyst

Next is well set up for the dramatic shift to online shopping, but its most recent trading statement still showed a 28% sales decline in the second quarter. The retailer had been expecting a much steeper fall though.

The big returns bugbear was less of an issue during lockdown, reflecting the fact that sales in the Childrensware and Homeware categories accounted for a higher percentage of overall sales. These markets have a lower return rate than dresses and formal wear – both of which have fared badly. That should provide some support to margins, but whether it continues now that stores are back open and shopping habits are returning to something like normal remains to be seen.

We will also be looking for more detail about new store openings. Plans announced in August to open three new stores with a greater focus on Beauty and Home has helped Next stand out from the struggling bricks and mortar crowd. It’s a brave move when many are predicting that shopping centre and high street landlords are facing one almighty closing down sale.

See the latest Next share price, charts and how to trade

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Unless otherwise stated estimates are a consensus of analyst forecasts provided by Thomson Reuters. 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.

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research disclosure for more information.


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    Important notes

    This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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