Friday preview: UK retail sales, Sage in the spotlight

The focus in financial markets at the end of the week will be on the latest retail sales and public sector borrowing figures scheduled for release in the UK.

Barclays Research has penciled in a 0.6% month-on-month drop in retail sales for October, following the 1.5% rise observed in September, as local Covid-19 restrictions went into effect.

To take note of, looking forwards, Barclays forecast that retail sales were set to drop "sharply" in November as the entire country went into lockdown.

"[However] the fall may not be as deep as the previous lockdown as consumers have become more familiar with online shopping," they added.

As regards the UK's public finances, the consensus was for a public sector borrowing to dip from £35.4bn in September to £33.7bn for last month.

For business software provider Sage's full-year, UBS's Michael Briest is forecasting 3.6% growth in underlying sales for total revenues of £1.86bn.

That compares to the £1.88bn of revenues that consensus has penciled-in.

The reason for the disparity between the two forecasts was that Briest was anticipating a greater headwind from currency movements.

The analyst also pointed out how the government's furlough scheme which was due to run through the end of the year was keeping business failure rates below normal.

Looking ahead, for the 2021 financial year, Briest was modelling a 4.1% rise in recurring revenues and a 19% drop in software and software-related sales, for 2.1% in total revenues to reach roughly £1.91bn.

However, a key question was what margins the firm was anticipating, with Briest having penciled-in 22.1%, which would depend in part on the level of research and development spend chosen by management.

Higher R&D which could push margins down to 21% or even 20% would be taken negatively by markets, the analyst added.

Investors would also be closely watching Sage's fourth quarter exit rate for annualised recurring revenues.

Friday 20 November

INTERIMS

Argentex Group , Fusion Antibodies , The Panoply Holdings

INTERIM DIVIDEND PAYMENT DATE

Air Partner, Animalcare Group, Cenkos Securities, Maven Income & Growth VCT, Smiths Group, Steppe Cement Ltd

QUARTERLY PAYMENT DATE

JPMorgan Japan Smaller Companies Trust, Primary Health Properties, SME Credit Realisation Fund Limited NPV, Tufton Oceanic Assets Limited NPV, Unilever

INTERNATIONAL ECONOMIC ANNOUNCEMENTS

Producer Price Index (GER) (07:00)

FINALS

Sage Group

AGMS

Base Resources Ltd , Crystal Amber Fund Ltd., Diurnal Group, GSTechnologies NPV (DI), Mc Mining Limited, Salt Lake Potash Limited (DI)

UK ECONOMIC ANNOUNCEMENTS

GFK Consumer Confidence (00:01)

Public Sector Net Borrowing (06:00)

Retail Sales (07:00)

FINAL DIVIDEND PAYMENT DATE

Smiths Group