Whitbread PLC, J Sainsbury PLC and JD Sports PLC on London’s business agenda for Wednesday
Trading updates are due from DFS Furniture, JD Sports, Sainsburys, Just Eat, Nichols, Pagegroup, Vistry and Whitbread
The travel sector has been blown around like a feather in the wind in the past couple of years, which has provided some shorter-term investors with some sport and long-term followers no little angst.
Whitbread PLC (LSE:WTB), owner of the Premier Inn hotel chain, will be releasing a trading update on what looks a busy Wednesday in the City diary.
Unlike some of its sector peers and smaller rivals, the FTSE 100 group is well placed for the coming financial year, with the worst of the COVID-19 pandemic set to be over by then, according to analysts at broker Peel Hunt.
With Downing Street apparently resisting calls to impose of further pandemic safety measures/restrictions, and with the Omicron variant of coronavirus seems to be working its way through the population very quickly, analysts said this bodes well for Whitbread.
Reiterating a ‘buy’ rating for the shares, they believe the recovery will “quickly re-establish itself” from early in the group’s new financial year, which starts in March.
With a share price that has lagged peers since last summer, Whitbread is expected to either catch up, or attract a bidder for the value of what is a largely freehold-backed business.
No mystery for Vistry
After some initial pandemic wobbles, housebuilders have been on a more confident upward path during the past year and a half, with Vistry Group PLC (LSE:VTY), the company formerly known as Bovis, the first of the sector’s larger operators to provide a trading statement in the new year,
This should reveal business as usual, having said in November that it was “firmly on track” to deliver full year underlying pre-tax profit of £345mln.
For that target to remain intact, according to Sophie Lund-Yates, an analyst at Hargreaves Lansdown, it will partly depend on the cost inflation environment, where rising costs have been affecting the whole industry.
“We believe Vistry will have this under control, as it’s able to offset the costs thanks to higher house prices,” she added.
It’s worth noting in passing that the Halifax House Price Index for December indicated the average UK house price had reached a new high.
“That’s good news in the short term but we’ll be keeping an eye on the outlook statement. Rising prices plus increasing interest rates could take some of the heat out the housing market. This isn’t exactly a crisis in the making at this point, but we wonder if management expects demand to temper over the medium term,” Lund-Yates said.
The retail sector will also start to make its presence felt in numbers from Wednesday, with post-Christmas statements expected from a couple of blue chips, including J Sainsburys PLC.
The first trading updates from the retail sector are likely to confirm a pretty miserable festive season on the high street, said analysts at AJ Bell.
But for food retailers, Christmas seemed to be “executed pretty well for shoppers”, said broker Shore Capital, though they cautioned that costs – especially labour – are the main determining factor behind the earnings impact.
Sainsbury’s is not expected by Shore Cap to be among the winners, with present guidance expect to be maintain, with recent industry data backing up its middling performance.
Shares in the orange-tinged grocer hit an all-time high in August on the back of takeover speculation, but have dropped almost a fifth from that level, with half-year results back in November solid enough but leaving forward-looking investors concerned about growth prospects.
JD not used to backing down
For retail growth in recent years, investors couldn’t have done much better than JD Sports Fashion PLC (LSE:JD.), which said in the autumn that it reckoned headline profit before tax for the year to January will come in above £750mln, compared to £421mln and £438mln in the past two years.
The shares got a pre-Christmas boost as Nike, for whom JD is a key partner on both sides of the Atlantic, provided an update indicating strong demand for trainers, sportswear and ‘athleisure’ clothing.
Boss Peter Cowgill has yet to officially throw in the towel after seeming to lose a drawn out battle with the competition regulator over the takeover of Footasylum, though reportedly the deadline to appeal the decision has already passed.
Similarly, the company has also had to back down over the bumper pay deal for Cowgill, with more details perhaps emerging around Wednesday’s statement.
Significant announcements on Wednesday 12 January:
Trading updates: DFS Furniture PLC, JD Sports Fashion PLC, J Sainsbury PLC, Just Eat Takeaway.com NV, Nichols PLC, PageGroup PLC (LSE:PAGE), Vistry Group PLC, Whitbread PLC
Interims: Gateley Holdings PLC
Economic announcements: Consumer price inflation (US), Federal Reserve ‘Beige Book’ (US), producer price index (US)