18th Mar by Mark Simpson

15 comments 2703 reads

Hello, and welcome to the Week Ahead, your weekly destination for discussion and analysis of what's coming up this week that may be of interest to investors.

Date	Big UK earnings	US company reporting	Economic announcements
Monday - 18 Mar	Marshalls (Finals)
Tuesday - 19 Mar	Essentra (Finals) DFS Furniture (Interims)		US Housing Starts US Building Permits
Wednesday - 20 Mar	Prudential (Finals) Computacenter (Finals) Investec (Q3)	Micron Technology (Q2) General Mills (Q3)	UK CPI, RPI US Mortgage Applications EU consumer confidence
Thursday - 21Mar	M&G (Finals) Direct Line Group (Finals) Centamin (Finals) Next (Finals)	Accenture (Q2) FedEx (Q3) Nike (Q3)	BOE Rate Decision UK PMI EU PMI
Friday - 22 Mar	JD Wetherspoon (Interims) Phoenix Holdings (Finals)		UK Retail Sales

It is another busy week for UK companies, with many reporting results for the period ending 31 December (or 31 January for those retailers which like to make sure they capture the Christmas numbers in their annual results). We’ll also get retail sales data on Friday, which could give an interesting picture of the health of the market. This is a topic we covered in our weekend newsletter, with the verdict being perhaps the retail market isn’t in as bad a position as some might think. You can read the newsletter online here.

Indeed, it is a busy week for economic indicators, with UK inflation data released on Wednesday. The OBR currently expects the central case for CPI to drop more rapidly than it did last year. Although last month's inflation figures had CPI at 4%, the OBR predicts it will be at the 2% target in 2024 and even below it in 2025. Let’s not hope the correction doesn’t become an over-correction.

Hot on the heels of the inflation data will come the interest rate decision from the Bank of England. At the last meeting, the committee voted by a majority of 6–3 to maintain base rate at 5.25%. However, the dissenters disagreed with which way interests should go next. Two members went for a 25 basis point increase to 5.5%. One member preferred to reduce the rate by 25 basis points to 5%. Since then, the economic data has been variable. Wages were slightly higher than expected, inflation numbers were slightly…

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yiannos1

18th Mar

Worth to mention is Bank of Japan’s imminent rate increase this week ending negative rates.

Also NVIDIA (NSQ:NVDA) conference big AI event starts today and since you mention Nike (NYQ:NKE) Lululemon Athletica (NSQ:LULU) results are out on Thursday as well.

martinck1

I'm always excited by Next (LON:NXT) (my largest holding) results, because I love (really love) the way they so honestly discuss their business, together with focusing on the right measures that build a strong business over time. I know it shouldn't be my largest holding because the retail sector is tough and it's more UK focused than I would like, but I can't help it.

Why can't every company talk about their business in the way Next does? Well we know the answer, because they are open with bad news, the share price often falls rather heavily. Also I don't think most companies understand their business so well and wouldn't be able to cope with the inevitable well-informed questions that arise from the openness.

stehuk

I believe Next (LON:NXT) results are on Thursday rather than Tuesday. (Just checked the financial calendar on the Next website.)

bohenie

Megan thanks for this - good to have this over-view at the start of the week - Re DLG and the Divi - can update the Stocko page - It still shows them paying a dividend and I don't think its the only page needs an update

Bouden54

Would certainly like to understand why Phoenix group (LON:PHNX) has been so weak - I know there is a bit of short interest and some have raised concerns over their high level of debt. Obviously most of their business is closed so question marks over how long dividend can be maintained. I will be staying on the sidelines until results, but will take a closer look then.

Chrisfarrell21

This talk about Phoenix group (LON:PHNX) I find genuinely surprising. In November they said they found half a billion £s worth of savings (one off, not recurring), that lead them to upgrade their three year cash generation target by £400m. They specifically said it would give them balance sheet optionality (a word I really dislike). So this can't help the dividend on an annual basis, but means they should be insulated from having to cut it.

And then the February statement saying they are ahead of long term cash generation targets two years early - quoted above in the article. If you are beating targets comfortably, then you should not have to cut dividends planned using the beaten targets. Would make no sense.

So it just doesn't seem like they are in a position to have to reduce the dividend. The doubt from the market genuinely confuses me. Unless the market thinks management are liars, are somehow jeapardising the solvency requirements, or about to go on some mega-spending spree I just don't get it.

Roll on Thursday.

I should also add Alpha International (LON:ALPH) full year results should be announced this week. I really like the company. We already know what the results should be, from the trading update in Jan, so should be no surprises.

Outlook I think depends a lot on rates, so they probably don't have much to tell us there. The line from management is that rates high equals lower growth, but then whilst rates are high they make a wedge of additional revenue / profit from the interest on large client funds they hold in the alternative banking division. Which can then be reinvested to really power growth when it returns.

Anyway, should be good to see. Management strike me as open and honest, and we can also see if there is any news about the move from AIM to the main market.

Cheers

Chris

daviHard

19th Mar

I wish my Phoenix group (LON:PHNX) with profits occupational pension was yielding 10%! Arguably, they're skimming too much off from policy holders.

Keelan Cooper

Hi stehuk,

We've now updated this on the table. Thank you!

Best,
Keelan

Hi martinck1,

I completely agree with you here. Next is a fantastic business, and the transparency in all of their updates is refreshing.

I believe our market might benefit if this detailed style of reporting became the standard. However, as you correctly point out, it could sometimes highlight upcoming bad news, so I'm sure plenty of companies are keen to avoid it!

It's interesting to note that Next is able to persistently trade on a higher P/E ratio than many of its industry peers and the wider market, perhaps as a result of its transparency and forecasting capabilities. Investors clearly value the reliability and reduced likelihood of any unforeseen shocks.

Best,
Keelan

Rusty2

Hi Keelan, .Centamin finals are on Thursday, 21 March 2024, not today.

Mark L.

Are the dates correct in the table? EG Computacenter (LON:CCC) results are due out on 20th not 19th March.

Howard Adams

20th Mar

As previous weekly threads have touched on European shares, and in this thread Next (LON:NXT) is discussed. Some might have an interest in signals coming out of the luxury retail sector.

This is a news feed about Kering SA (EPA:KER) but mentions several other luxury shares such as LVMH Moet Hennessy Louis Vuitton SE (EPA:MC) , Hermes International SCA (EPA:RMS) , Burberry (LON:BRBY) and several others.

I find some of these signals quite useful as insights into the health of economies such as China and Asia Pac. in general. Here is one of the news feeds.

Disclosure: I hold Kering SA (EPA:KER) LVMH Moet Hennessy Louis Vuitton SE (EPA:MC) Hermes International SCA (EPA:RMS) and have held others in the past.

BUZZ-European luxury names slide after Kering's warning

Kering SA

Newsan hour ago** Shares in European luxury stocks move lower on Wednesday
after Kering PRTP.PA warned that first-quarter sales at its
star label Gucci would drop by around 20% due to weakness in
Asia

** "A rather worrying signal for the luxury goods sector,"
Citi analysts say in a note

** Kering dives around 13%; if losses hold the stock will
see its worst day since May 1986

** Burberry BRBY.L , which J.P.Morgan analysts say the
Kering warning is most applicable to, is down 4.5%

** LVMH LVMH.PA slides 2.4%, while Birkin bag maker Hermes
HRMS.PA is down 1.6%

** Cartier owner Richemont CFR.S falls 3.8%

** Italian luxury group Ferragamo SFER.MI slips 1.9%,
luxury puffer jacket maker Moncler MONC.MI edges down around
1%

Regards

Howard

22nd Mar

Phoenix group (LON:PHNX) results today. Market seems to like it, dividend increased a very small amount, but still increased. The increase is 2.5% to the final dividend, which looks like being about half of the full year dividend, so final div up about 1.25% I guess. Better than nothing. Everything else looks good, apart from the IFRS loss after tax of £(88)m, although this was down from £2bn(!) the previous year.

I didn't understand the "new progressive dividend policy". When I first saw this reference in the headline, I assumed it was corporate speak for a dividend cut, but no. It just seems they're going to keep paying and increasing (in small increments) the dividend. As they have been doing. The bit that should clarify the new policy in the results says:

"The Board will continue to announce any potential annual dividend increase alongside the Group's Full Year results and expects the Interim dividend to be in-line with the previous year's Final dividend. The Board will continue to prioritise the sustainability of our dividend over the very long term. Future dividends and annual increases will continue to be subject to the discretion of the Board, following assessment of longer-term affordability."

This doesn't sound different at all to me, but sounds positive. They talk elsewhere about comfortable dividend cover, so it all sounds like the investment case (from an income perspective) is firmly in tact.

Hello Mark, you were right Nike (NYQ:NKE) shares down today, forecasts have been reduced.

Week Ahead: Insurers | Retail | Nike | UK Inflation

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Mark Simpson

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BUZZ-European luxury names slide after Kering's warning

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