Tuesday preview: Debenhams, Carpetright, Petrofac, Faurecia
(ShareCast News) - Debenhams was leading a small charge of company news due on Tuesday morning, with finals from Carpetright and an update from Petrofac also providing some read-through.
The department store chain was looking to be boosted by weak sterling, with actual growth continuing to be poor.
UBS was forecasting Debenhams Q3 sales growth at 1%, including a 2% FX benefit, implying a
-1% like-for-like, broadly the same as seen as the implied Q2 run-rate but a slowdown
from the flat seen across the whole first half period.
The BRC non-food like-for-like for the March to May period slowed to -0.3% with clothing the second weakest category over that period and health and beauty in the middle of the pack, UBS pointed out, though that remained positive over the period.
With only around 50% of sales from clothing and a further 30% form health and beauty, those statistics should help balance out the UK like-for-like performance.
UBS said there could be some pressure on the -25bp gross margin if the sale intensity had increased, but given the weighting of sales to the first half and the tightening of the guidance in late April, the analysts said it would have had to be a "very significant" mid-season sale period in May.
Carpetright was also set to release its final figures, with Deutsche Bank pointing out that the carpet retailer reported UK like-for-like sales growth for the 12 weeks of the fourth quarter similar to the prior quarter, but softer than trading during January.
Management was expecting profits for the full year to be towards the lower end of the consensus range.
Deutsche said that may not come as a major surprise given the recent softer trading of other UK hard goods retailers, but it still cut its Apr-17 profit before tax forecast to £14.4m from £16.0m, and lowered its target price to 280p.
"On our new forecasts, Carpetright trades on CY17 EV/Sales of 0.34x, still a low level by historic standards and compares with current year EBIT margin of 3.6%.
"It trades on a P/E of 13.8x multiple," Deutsche noted.
Faurecia was also due to host an investor day on sustainable mobility in London on Tuesday, having renamed its 'emissions control technology' division to 'clean mobility' last year.
That division generated value added sales of €4.2bn - 27% of total - and an EBIT of €394m - 41% of group - with an EBIT margin of 9.4%, UBS pointed out.
Analysts at UBS said that as the world shifted towards electric vehicles, it saw the clean mobility division as needing to reinvent itself for its light vehicle exposure.
"We expect a rapid acceleration of the penetration of EV which should represent c14% of annual new car sales in '25.
"In addition, the faster-than-anticipated decline in diesel will likely cap the potential for 'clean' diesel for passenger cars as car makers are moving towards mild-hybrids."
Petrofac's trading update was lumped in with others this week from sector peers Tullow Oil and Wood Group by Jefferies, calling it a group "under material pressure" from both specific company and broader macro issues.
Jefferies said evidence of trading normality from Petrofac would be positive, but articulation of market challenges to Wood Group were not yet in the price, so negative in their view.
Tuesday June 27
UK ECONOMIC ANNOUNCEMENTS
CBI Distributive Trades Surveys (11:00)
BCA Marketplace, Carpetright, Findel, IG Design Group, Northgate, Photo-Me International, Polar Capital Holdings, ULS Technology
Benchmark Holdings , Blue Prism Group, Lakehouse, Porvair, Velocity Composites
Debenhams, Petrofac Ltd., Public Power GDR SA (Reg S)
SPECIAL EX-DIVIDEND DATE
Augean, British American Inv Trust, Coretx Holdings, Defenx, Echo Energy , Gaming Realms, HydroDec Group, JZ Capital Partners Ltd, Mereo Biopharma Group, Nature Group, Regal Petroleum, Rhythmone, Sovereign Mines of Africa, Watchstone Group
FINAL DIVIDEND PAYMENT DATE
Dillistone Group, Spire Healthcare Group, Worldpay Group
Public Power GDR SA (Reg S)