CONSUMER confidence will come under the spotlight again this week with announcements from fashion chain Next and budget airline EasyJet.
Retailer Next is set to report on first-quarter trading on Thursday, amid one of the toughest periods on the high street in years.
When it reported annual results in March, the group warned like-for-like sales would fall by up to 7 per cent in the
first half of the year, with its customer base, aged between 25-45, likely to be the hardest hit by higher costs and debt burdens relating to the credit crunch.
Since then, poor weather in March and April, compared to a heat wave during the sale period in early 2007, do not make for a flattering comparison.
JP Morgan analyst Richard Chamberlain said the retailer was up against a "perfect storm", predicting first-half sales at the bottom end of the guided range.
"The colder weather may have boosted some of Next's home ranges, but will have impacted sales of spring/summer clothing," he noted.
Even before the current credit crunch slowdown Next was struggling with high street sales declines, and underwent a major store refurbishment programme. While the company has a sound financial position, Chamberlain said Next "needs to convince the market that it has the potential to generate same-store sales growth in a more benign consumer environment".
Another company likely to be feeling the pinch is EasyJet, with the impact of the soaring cost of fuel likely to dominate its interim results announcement tomorrow.
The Luton-based carrier has already braced investors for lower profits in the second half of the year by warning of a potential £45 million hike in fuel costs in March.
With oil prices remaining well above $100 a barrel since that update (and being pushed to $120 yesterday) analysts are fearful of what lies in store for the group.
Numis Securities' Richard Carter said: "We expect EasyJet to be positive with regard to the near-term revenue environment and supply fundamentals are encouraging."
But Carter said fuel was "another story" as he cut Numis' earnings forecasts. He now expects full-year pre-tax profits will fall by £35m to £156.7m in the year to 30 September.
Despite the gloom there is expected to be some positive news from the high street on the recovery of entertainment retailer HMV, which provides a pre-close trading statement on Friday. The group, which owns the eponymous high street chain as well as bookseller Waterstones, was a stand-out performer over Christmas, notching up a 9.4 per cent like-for-like sales jump for the five weeks to 5 January.
During that period the performance at the HMV chain soared by 14 per cent, helped by bumper sales of games, consoles and million-selling DVDs such as Simpsons The Movie and the Bourne Ultimatum.
The group launched a turnaround plan last year after profits tumbled amid competition from music downloads and supermarkets. The recovery plan included store revamps, a focus on big-selling games and consoles and the roll-out of "Next Generation" stores with download stations and smoothie bars. Two new format stores are operating in Dudley, West Midlands, and Tunbridge Wells in Kent.
Broker Lehman Brothers said it was expecting pre-tax profits of £53.9m for the year to 30 April, at the top end of market estimates, compared to £45.2m in the previous year.
Finally, Lloyds TSB is expected to buck the recent trend of calling on shareholders for a capital boost when the bank delivers a trading update.
It is thought the group will not follow the lead of Scottish giants Royal Bank of Scotland and Halifax Bank of Scotland with rights issues, with speculation suggesting that Lloyds will instead stress it has a strong enough capital base and the benefit of good access to funds.
SHAREHOLDER QUESTIONS ABERDEEN Asset Management will face questions over its shareholder base when it reports interim results today, after a prominent hedge fund increased its stake to more than 16 per cent.
Toscafund only began buying into Aberdeen in March, but became its biggest shareholder last month ahead of Lansdowne Partners, which holds 10.46 per cent.
Reports have claimed the fund has made the investment with a long-term view, but Toscafund has been involved in two of the highest profile corporate battles in the last 12 months.
The fund, managed by Martin Hughes, was part of the Virgin consortium which attempted to buy Northern Rock.
It also added to calls for a shake up at Dutch bank ABN Amro which was later sold to a consortium led by Royal Bank of Scotland.
The fund's directors include former Royal Bank of Scotland chairman George Mathewson.
Aberdeen is expected by analysts to report a 9 per cent increase in pre-tax profits to at least £47 million for the six months to 31 March. Analysts at Landsbanki are forecasting that total assets under management will have fallen by £3 billion to £100bn during the quarter, but said Aberdeen was now defensively positioned, which should accelerate profit growth in the second half.
Landsbanki has a target price of 200p on the shares, compared to Friday's closing price of 149.25p.
The full article contains 886 words and appears in The Scotsman newspaper.
