Next week on the stock market

Among those currently scheduled to release results next week:

• ASOS will be looking to end its downward trajectory
• Halfords is hoping for a strong Christmas period to keep profit guidance feasible
• Tesco hopes to report a resilient Christmas trading season amid the cost-of-living crisis

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

*Events on which we will be updating investors.

ASOS - Sophie Lund-Yates, Equity Analyst

ASOS entered the Christmas period on the back of a disappointing year, which saw the online fashion retailer’s valuation fall by more than 75% in 2022. This decline came as full-year profit before tax tumbled to £22m, down from £194m the previous year. Next week’s trading statement will give us an indication of whether this downward trajectory is expected to continue.

High inflation throughout 2022 left consumers with less cash in their pockets, meaning they had less money to spend on updating their wardrobe. These cash-strapped consumers also returned more items last year, causing higher operating costs and elevated stock levels. With Christmas typically being a time of bumper sales for retailers, we’re keen to see if this has helped reduce the group’s excess stock.

With ASOS selling products right along the price scale, it was well set up to offer something for everyone this Christmas. As such, next week’s figures could give an early indication as to how clothing retailers fared this Christmas.

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Halfords - Sophie Lund-Yates, Equity Analyst

In November, Halfords outlined that full-year profits are expected to be at the lower end of their previous £65m to £75m guidance range. Next week’s trading statement will provide some steer as to whether this guidance remains feasible.

As the cost-of-living crisis continues, people’s discretionary income will shrink. This poses challenges for some of the more discretionary products the group offers. And like everyone else, Halfords have seen their costs rise significantly this year. To mitigate this, the group’s expected to deliver more than £20m in cost savings by financial year-end. We wonder if that target will need to be extended if conditions prove tougher than predicted.

Luckily, Halfords is already underway with its transition towards more reliable service revenue. A strong uptake to their Motoring Loyalty Club, which offers discounts on certain services, saw almost one million members join in less than nine months. We’re eager to see how many more members Halfords have locked into their Motoring Club since the last update.

While the outlook is challenging in the short term, we remain cautiously optimistic about Halfords longer-term plan. Next week’s trading statement will offer an insight into consumer spending during this tough time.

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Tesco - Sophie Lund-Yates, Equity Analyst

Christmas is a crucial time for supermarkets. It’s traditionally a time of bumper sales and profit-making as customers splurge on extra special food and gifts. Next week, we’ll find out if this was the case for Tesco. The challenge this year of course is the ongoing cost-of-living crisis, which has been pushing customers towards the discounters.

Specifically, we’d like to know if Tesco was forced to offer steeper discounts than expected to entice and retain customers. If that’s the case, it’s likely profit expectations could be tempered for the full year. This is an existing challenge for Tesco. We heard at the half year that despite higher sales, underlying operating profit fell 9.8% to £1.3bn, as inflation pushed costs higher and consumers shifted to own brand items.

To Tesco’s credit, its huge scale and hard work on positioning itself as a better-value offering should stop any dramatic shifts. As one of the first, and arguably better-run retail giants, reporting Christmas results, next week’s numbers will be taken as a bellwether for the wider industry.

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