Next week on the stock market

Among those currently scheduled to release results next week:

• How long can consumers keep spending? Experian may be able to shed some light
• Ocado Retail is teed up to report a full year sales decline as customers tighten their belts
• Currys could feel the pinch if consumers curbed spending this Christmas

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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.

Experian – Matt Britzman, Equity Analyst

Experian’s half year results, back in November, showcased a lot of what we like about this business. The revamped consumer division has been adding new members and saw organic revenue growth in double digits. On the businesses-to-business side, Experian’s host of products look well placed to help lenders who are starting to look for lower risk borrowers.

The threat of a wider economic downturn remains, though. If lenders start to retreat and consumers rein in spending, then demand for Experian’s products could come under pressure. For now, we’re still seeing signs that consumers are happy to keep spending, despite the threat of recession. That should be positive news for Experian, but the real thing to watch for is any commentary on the outlook and whether Experian’s treasure trove of data is starting to throw out any warning signs.

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Ocado – Sophie Lund-Yates, Equity Analyst

Ocado Retail is facing challenges. Customers are swapping usual items for cheaper alternatives. In the third quarter the group’s average selling price rose 5% overall, but within that there was a 2% decline relating to the preference for value goods. We expect this trend to have continued in the final quarter, and we’ll find out the extent of changing customer attitudes over the important festive season.

Last we heard, the average basket value was down 6% because of people buying fewer items. With inflation still running rampant this is unlikely to have reversed. This is troubling because the group’s grappling with enormous energy costs so lower basket values limit Ocado’s ability to help offset this.

The difficult conditions mean Ocado expects “to see a small sales decline” for the full year, and close to break-even cash profits. That appears to be a sensible prediction in our view, but a worse-than-expected outlook could upend things.

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Currys – Sophie Lund-Yates, Equity Analyst

Currys sells a lot of big-ticket items like TVs, laptops, and white goods like fridges and washing machines. But because these items are expensive, demand could be on the chopping block if consumers decide to curb their spending. With the group’s underlying operating margins already running thin at 0.6%, there isn’t much breathing room if demand falls further. Next week’s Christmas trading update will give an early insight as to whether consumer spending pulled back during the festive period.

Currys’ business is highly seasonal, with a substantial proportion of its revenues, and any profits or losses, generated in the second half of its financial year. This includes the likes of Black Friday and the Christmas period. As such, a strong showing from next week’s Christmas trading update will be key if the group are to meet investors’ expectations. Keep in mind, there’s already been a downgrade to the group’s profit before tax target this financial year, so any further setbacks would represent a real challenge.

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