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The FTSE 350 next week

2 January 2019

No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.

Christmas is crucial for retailers, and next week we find out how the high street giants have weathered what’s expected to be a pretty bleak midwinter.

Among the companies we’ll be covering:

  • Marks & Spencer's store closures mean revenues will inevitably look bad, but with M&S Food also running into trouble it could have been a particularly tough year.
  • Christmas is an important time for Tesco, but investors will also have their eyes on the international operations.
  • Taylor Wimpey confirmed as recently as 13 November it’s on track to hit full year guidance, so this update is all about the future outlook.

FTSE 350 stocks reporting next week

07-Jan
No FTSE 350 Reporters
08-Jan
Morrison (WM)* Christmas Trading Statement
Safestore Full Year Results
SIG Full Year Trading Statement
Ferrexpo Q4 Production Report
09-Jan
Sainsbury* Q3 Trading Statement
Taylor Wimpey* Full Year Trading Statement
10-Jan
B&M Q3 Trading Statement 
Card Factory Q4 Trading Statement
Hilton Food Group Trading Statement  
Marks & Spencer* Q3 Trading Statement
Mitchells & Butlers Q1 Trading Statement
Premier Oil Trading and Operations Statement
Tesco* Christmas & Q3 Trading Statement
11-Jan
Grafton Group Q4 Trading Statement

*Companies on which we will be writing research

Marks & Spencer

M&S is closing dozens of mainline stores as part of its current restructuring, and that will inevitably mean total sales are lower this Christmas.

Ideally, the remaining stores would be able to keep like-for-like (LFL) sales moving forwards, while the still growing food business delivers results. Unfortunately recent updates have shown that’s not the reality.

The first half saw Clothing & Home LFLs sink 1.1%, and food was worse as LFLs fell 2.7%. Data from market research group Kantar suggests things deteriorated still further in the run up to Christmas.

Given the troubles affecting the wider high street and the group’s lack of a material online offer, it’ll come as no surprise to hear we’re not expecting pretty things from Marks next week.

Marks & Spencer factsheet, including share prices, charts & research

Register for updates on M&S

Tesco

Tesco's UK business has delivered 11 consecutive quarters of like-for-like sales growth. Investors will be hoping for a strong Christmas.

For all the positive strides, in many ways it’s a case of one step forward, one step back at the moment.

Competition has been fierce among the UK’s supermarkets for several years, and with Sainsbury and Asda set to merge, that environment could be about to get tougher. We’ll find out what the CMA has to say about the deal early this year, with a final decision due in March.

Tougher trading restrictions in Poland mean like-for-like sales in Tesco’s Central European business fell 1.2% at the half year, while bulk selling operations in Thailand have also proved challenging. Weaker than expected profitability here meant first half numbers came in shy of expectations. Investors will want to see signs that margins in the Thai business can move back towards the 6% it achieved last year.

Tesco factsheet, including share prices, charts & research

Register for updates on Tesco

Taylor Wimpey

Despite low interest rates boosting affordability and a structural housing shortage, worries over the direction of the economy post-Brexit mean the UK housing market is starting to creak.

It’s normal for activity to wind down in the run-in to Christmas, but the wheels were turning even slower than usual this festive period. Rightmove says prices fell 3.2% between October and December, while the latest data from both Nationwide and Halifax don’t paint a pretty picture either.

This uncertain environment is clearly not good news for the builders, but it’s worth remembering that new build trends have been healthier than the wider market in recent times. It’ll be interesting to see if supportive government policies like Help to Buy can keep that going.

Taylor Wimpey factsheet, including share prices, charts & research

Register for updates on Taylor Wimpey

A non-executive director of Hargreaves Lansdown plc is also a non-executive director of Tesco plc.

Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by Thomson Reuters. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Past performance is not a guide to the future. Investments 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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Investment notes
No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.
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