Tesco, Boohoo and Whitbread among key names in coming week, Fed eyed in macro diary

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The coming week will see results and updates from a number of major firms including supermarket giant Tesco, online fashion titan Boohoo and Premier Inn owner Whitbread.


Meanwhile, there will also be news from construction equipment rental firm Ashtead and bike retailer Halfords, with the Fed interest rates decision on Wednesday to be the headline macroeconomic event for the week.


Boohoo hopes to avoid post-lockdown slowdown


A first-quarter trading statement from online fashion firm Boohoo Group PLC (LON:BOO) will likely be eyed to see how the company has fared as lockdown restrictions have been slowly eased and customers can now buy their clothes from high street stores again.


With this in mind, revenue growth will be the key focus for the period as investors watch for any signs of a slowdown, as well as how it is performing in the key US market which is a major source of future growth.


Expansion will also be on the cards as Boohoo looks to acquire more warehouses and expand its existing estate, with capital expenditure for the full year expected to be between GBP125-GBP175mln.


Meanwhile, there will also be interest in the firm’s review of its supply chain, as it is expected to publish a full list of its suppliers in three months’ time.


Ashtead looks to build up post-pandemic strength


Construction equipment rental firm Ashtead Group PLC (LON:AHT) will report full-year results on Tuesday, with the numbers likely to reflect the sharp slowdown in construction activity as the pandemic slammed the brakes on building.


However, the company used the time to replace its equipment and cut down on costs, so shareholders will be hoping the group is well-positioned to benefit from a return to normalcy as lockdown restrictions ease across its markets.


With this in mind, the company’s predictions for construction activity will be key, particularly with many countries looking to spend big on infrastructure projects to kick start their economies.


Whitbread checks in


After slumping to a GBP1bn loss for the past year, Whitbread PLC‘s (LON:WTB) hopes for the new financial year are hanging on staycation bookings for its Premier Inn hotel chain and growth in its nascent market of Germany, with a sluggish opening up of international travel.


Before the 17 May pandemic reopening date, the FTSE 100 group said it had 92% of its UK estate open currently and leisure customers will be allowed to check in.


“Roughly 15% of the group’s hotels are dotted around the UK’s coastline and with travel restrictions causing chaos for holidays abroad those locations should benefit,” said analyst Laura Hoy at Hargreaves Lansdown.


“55% occupancy is the magic number at which Whitbread says it can break even, so we’ll be looking for overall bookings to exceed that figure.”


She said the pandemic’s not been all doom and gloom though for Whitbread as it has used its size and stability to grow its market share.


“Last year the group increased its hold on the UK market by 6.9 percentage points– only time will tell if that trend will continue as things loosen up.”


As for the German operations, they are expected to be loss-making both this year and next, but investors will be keen to hear whether the group’s hotels are gaining traction.


Halfords eyes profit from lockdown cycling boom


Halfords PLC (LON:HFD), the car parts and bikes seller, saw a boom in demand as people turned to cycling during the lockdown as a means of getting fit.


“While there may be concerns bike sales might have reached a pandemic peak, revenues from cycling sales continued on a rapid uphill trajectory earlier this year, rising 43% in the 7 weeks to February 19th, indicating a deep-seated shift in transport choices,” suggested Susannah Streeter, the senior investment and markets analyst at Hargreaves Lansdown.


“But supply chain issues have held back growth from shifting up to an even higher gear with the company having difficulties getting hold of the right stock. Halfords said it expected full-year pre-tax profit to come in at GBP90m – GBP100m, after better than anticipated trading in the first half of the final quarter. Despite reduced journeys because of the third lockdown, motoring sales have fallen less than expected, and are likely to tick up again as the country eases out of social distancing measures and more people return to a part-time commute,” Streeter said.


Tesco checks its receipts


Tesco PLC (LON:TSCO) releases a fiscal first-quarter trading statement in the wake of reports that its recent marker share resurgence has stalled.


The supermarket giant had been reclaiming market share from the German hard-discounters Aldi and Lidl, neither of which has an online service worthy of the name, but in the 12 weeks to the middle of May, its market share eased a little.


Tesco said it expects sales to be much steadier this year and some of the additional sales volumes gained in the core UK market will fall away as COVID-19 restrictions ease.


“But we expect a strong recovery in profitability and retail free cash flow as the majority of the additional costs incurred as a result of the pandemic in the 2020/21 financial year will not be repeated,” the company said at the time of its full-year results in April.


As for the first-quarter results due out on Friday, the comparatives will be tough because a year ago we were in the grip of stockpile fever


“Analysts will be watching … how Tesco’s Aldi Price Match and Clubcard Price schemes are faring. They helped the company take share in a fiercely competitive market last year. According to data from Kantar Worldpanel, Tesco’s market share reached 27.4% in the 12 weeks to 18 April, its highest level since January 2019, although that figure then receded to 27% in the 12 weeks to 19 May,” AJ Bell’s investment director Russ Mould observed.


“Profits should at least be helped by a decrease in direct costs to the business from COVID, which came to GBP892 million in the year to February 2021,” Mould added.


Macro matters


For the coming week, the market will be looking forward to hearing what the US Federal Reserve policymakers are currently thinking about inflation, bond purchases and future interest rates.


The Fed’s rate-setting body, the Federal Open Market Committee (FOMC), meets on Tuesday and Wednesday, with this month’s meeting particularly important as it will include a new version of the committee’s economic projections and members’ updated forecasts for growth, inflation, and the much-watched ‘dot plot’ of forecasts for where interest rates will be at the end of this and the next few years.


For the moment, the headline Fed funds rate is 0.25%, where it has been since March 2020, with US$7.9trn of assets on the central bank’s balance sheet – 90% higher than before the start of the pandemic.


But there have been more calls from FOMC members to begin “thinking about thinking about” tapering down their bond purchases (aka quantitative easing), observed market analyst Marshall Gittler at BDSwiss, with other committee members expressing the view that there’s a “tight” jobs market, with a low number of unemployed relative to the number of jobs available.


The main focus will be on the dot plot, which is how the FOMC folk concretely express their view of monetary policy, with the last time seeing 11 out of the 18 people saying they thought rates would be unchanged until the end of 2023, compared to 12 out of 17 at the previous meeting.


“At the other extreme, there were two people at 1.125% in March, vs only one in December. So while the median dot remained unchanged, it’s clear that opinions were diverging. How much will they diverge this time? And in particular, will the median dot move up to 0.375%? Enquiring minds want to know!”


The market seems to be getting behind the Fed’s continued assertion that above-average inflation is transitory, partly caused by bottlenecks in the reopening of the global economy as lockdowns begin to ease.


“That does nothing to explain rampant house prices (or for that matter soaring prices across other asset classes ranging from equities to cryptocurrencies) but the Fed seems oblivious to, or at least reluctant to acknowledge, the unintended consequences of the tidal wave of cheap liquidity which it is helping to provide,” said analysts at AJ Bell.


“As such there seems little chance of the Fed talking about interest rate rises or easing back on its $120bn-a-month QE scheme, but economists and investors will be looking for even the tiniest indication of a shift in policy momentum.”


Other macro items to watch in the week include European industrial production data on Monday; UK jobs market numbers and US retail, factory gate inflation, industrial and housebuilding data on Tuesday; UK inflation and US housing figures on Wednesday; US weekly unemployment on Thursday and UK retail numbers and the Bank of Japan monetary policy meeting on Friday.


Significant announcements expected for week ending 18 June:


Monday June 14:


Trading announcements: SThree PLC (LON:STEM)


Finals: Ted Baker PLC (LON:TED), Augmentum Fintech PLC (LON:AUGM), Draper Esprit PLC (LON:GROW)


Interims: Crest Nicholson Holdings PLC (LON:CRST)


Economic data; US inflation expectations


Tuesday June 15:


Trading announcements: Boohoo Group PLC (LON:BOO), Bellway PLC (LON:BWY)


Finals: Ashtead Group PLC (LON:AHT), Anemoi International Ltd (LON:AMOI), CML Microsystems Plc (LON:CML), Iomart Group PLC (LON:IOM), Tatton Asset Management PLC (LON:TAM), Thalassa Holdings Ltd (LON:THAL), TP Group PLC (LON:TPG), Vianet Group PLC (LON:VNET), Telecom Plus PLC (LON:TEP), GB Group PLC (LON:GBG)


Interims: On The Beach Group PLC (LON:OTB), Oxford Biodynamics PLC (LON:OBD), Pressure Technologies PLC (LON:PRES), Ramsdens Holdings PLC (LON:RFX)


Economic data: UK unemployment, US retail sales, US PPI


Wednesday June 16:


Trading announcements: Tullow Oil PLC (LON:TLW), Origin Enterprises PLC (LON:OGN)


Finals: Best Of The Best PLC (LON:BOTB), Castings PLC (LON:CGS)


Economic data: Fed rates decision, UK inflation


Thursday June 17:


Trading announcements: Whitbread PLC (LON:WTB)


Finals: Halfords Group PLC (LON:HFD), Dr Martens PLC (LON:DOCS), NextEnergy Solar Fund Limited (LON:NESF), Record PLC (LON:REC), Renold PLC (LON:RNO), Syncona Limited (LON:SYNC), Volex PLC (LON:VLX)


Interims: Safestore Holdings PLC (LON:SAFE)


FTSE 100 ex-dividends to knock 1.39 points off the index: 3i Group plc (LON:III), Land Securities Group PLC (LON:LAND), Intermediate Capital Group PLC (LON:ICP)


Economic data: US jobless claims


Friday June 18:


Trading announcements: Tesco PLC (LON:TSCO)


Finals: Inspecs Group PLC (LON:SPEC)


Interims: Blue Prism Group PLC (LON:PRSM)


Economic data: UK retail sales

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