PREVIEW-UK retailers coping, braced for austerity pain

Trade the News

Friday September 10, 2010 09:34:11 AM GMT

* Kingfisher H1 underlying pretax profit seen up 19 percent

* Next H1 opg profit seen up 15 percent

* John Lewis H1 pretax profit seen up 15 percent

* Debenhams Q4 sales seen up 0-3 percent

* Kesa, SuperGroup, Booker seen posting higher sales

By James Davey and Mark Potter

LONDON, Sept 10 (Reuters) - A slew of updates from Britain's biggest retailers next week are expected to show most are coping well in the face of tough trading conditions, but are fearful of the gathering storm of public sector austerity and tax rises.

Europe's biggest home improvements retailer Kingfisher, Europe's No. 3 electricals retailer Kesa and John Lewis, which runs department stores and the Waitrose grocery chain, will all publish statements on Thursday.

Dubbed "Super Thursday" by sector analysts, updates are also due from Booker, Britain's biggest cash-and-carry wholesaler, and Dunelm, the homewares retailer, as well as official data on August retail sales.

Earlier in the week, statements are due from department stores group Debenhams and fast-growing youth fashion retailer SuperGroup on Tuesday, while Next will report first-half results on Wednesday.

Although of results of UK retailers have generally started to improve following the recession, the general retailer index has underperformed the broader equity market by 13 percent this year.

Many experts think the sector faces a harsh winter as the coalition government cuts spending and raises taxes to rein in a record public deficit, so their pronouncements on prospects next week will be studied closely.

A recent industry survey showed British retail sales growth accelerated last month, helped by clothes sales, but discounting played a part in the improvement and consumers remain reluctant to splash out on big-ticket items such as kitchens or large pieces of furniture.

HIGHER MARGINS

Analysts expect Kingfisher to report a 19 percent rise in first-half adjusted profit to 342 million pounds ($527 million), according to a company poll.

The group, which owns B&Q stores in Britain and Castorama in France, has already posted a drop in first-half underlying sales, but this should be offset by higher profit margins as it benefits from its drive to buy more goods centrally and directly from cheaper production areas like Asia.

Last month Next indicated it expected operating profit for the first half to be up about 15 percent to 229 million pounds.

However, Chief Executive Simon Wolfson cautioned there had been a "noticeable cooling in retail demand" among its huge mortgage-holding demographic.

Employee-owned John Lewis has already revealed a 15 percent rise in first-half sales, showing it is winning market share. Arden Partners analyst Nick Bubb is forecasting a 31 percent rise in pretax profit to 125 million pounds.

Debenhams is expected to report underlying sales growth of flat to up 3 percent for the fourth quarter of its fiscal year, according to a Reuters poll of six analysts.

The firm is benefiting from a major shift in product mix from concessions to own-bought sales.

Kesa is likely to report a boost to TV sales in its fiscal first quarter, thanks to the soccer World Cup. Larger rival Dixons Retail noted a similar phenomenon last week.

Analysts at UBS and Citi both expect like-for-like sales to have climbed 4 percent at Kesa's Darty chain in France and 2 percent at its Comet stores in Britain.

SuperGroup, owner of the Superdry fashion label worn by celebrities such as David Beckham, has seen its share price more than double since it floated in March.

It is expected to post stellar first-quarter sales. Arden's Bubb is forecasting growth of up to 60 percent.

Analysts expect Dunelm to deliver a 42 percent jump in full-year profit to 76.2 million pounds, according to Thomson Reuters I/B/E/S Estimates.

The group, which sells products such as curtains, bedding, blinds, rugs and lighting from mostly out-of-town stores, is benefiting from new stores and its focus on low prices.

Booker is expected to post a rise in first-half sales, with UBS forecasting a 3 percent increase. (Editing by David Holmes) ($1=.6490 Pound)

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