What can we expect to see from the FTSE 350 next week?

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With a big week ahead for the FTSE 350, Hargreaves Lansdown have highlighted the headline stories to keep an eye out for next week.

Below are the seven main company announcements that we can expect to see from January 11-15.

  1. Vistry should reveal whether it still plans to resume its dividend payments
  2. Sainsbury rides the online shopping wave as non-essential retailers close
  3. Persimmon looks set to maintain sales momentum
  4. Cancellation of party season could dent sales at ASOS
  5. Eyes will be on the supply chain scandal at boohoo
  6. Tesco will let us know how the online business is delivering
  7. Primark owner ABF has proved particularly resilient despite lockdowns

Vistry, Q3 Trading Update, Tuesday 12 January

Laura Hoy, Equity Analyst

“With a third national lockdown in full swing, one major question remains for housebuilders like Vistry – what will this do to the economy? The sector escaped the turmoil of 2020 relatively unscathed due to the housing market’s resilience, but as the pandemic drags on, the threat of a prolonged economic downturn is increasing. That makes the outlook statement the most important place to look next week.

“In November, Vistry said it was planning to resume dividend payments. But financial fortitude will once again take precedence. That means the payout could appear in the latter part of the year, if at all. This will depend on management’s predictions for what the latest round of lockdown restrictions will mean for the income statement. Debt repayment was also on management’s to-do list, the results of which could help, or hinder, the case for renewed dividend payments. Vistry has taken an aggressive approach to buying land over the past year. We think this is a prudent move, so long as conditions don’t deteriorate too much, which would make it more difficult to turn these plots into profit. Therefore, it will be interesting to note if the group’s approach to land purchasing has changed.”

Persimmon, Q4 Trading Update, Wednesday 13 January

Steve Clayton, Manager of the UK Select Funds

“Persimmon, one of the UK’s largest housebuilders gives a Q4 trading update on Jan 13. The housing market remains open and investors will be keen to see if Persimmon has maintained momentum since they last reported in November. Back then sales were running well ahead of pre-Covid levels as the market bounced back from lockdown. Home buyer demand has been boosted by the stamp duty holiday and with most of Persimmon’s output priced well below the £500,000 stamp duty ceiling, the group should have been a big beneficiary. With net cash in the bank, and profit margins recovering, investors will also be looking for a steer on dividend intentions.”

J Sainsbury, Q3 Trading Update, Wednesday 13 January

Susannah Streeter, Senior Investment and Markets Analyst

“J Sainsbury has been riding the wave of online shopping during the pandemic and that trend is likely to have accelerated over the last quarter with fresh restrictions imposed on the non-essential retail sector. The big grocers are once again proving to be big beneficiaries of winter lockdowns with customers rushing to book up delivery slots. What’s impressive is that J Sainsbury has been collecting many more clicks for not just food orders but general merchandise as well and we expect this trend to have continued over the period. Pick-ups of gifts from Argos counters in store are also likely to have driven sales further. J Sainsbury is on a conveyor belt of change to adapt to the way its customers now want to shop. It’s planning to shut 420 large Argos stores and also will remove deli counters from its supermarkets, given lower demand from customers for these products. Extra hygiene measures and social distancing at its stores and warehouses comes at a cost, but higher sales are likely to again outweigh that extra spending.”

ASOS, Q1 Trading Update, Wednesday 13 January

Susannah Streeter, Senior Investment and Markets Analyst

“Sales soared at ASOS last year during the pandemic as ‘staying-in’ fashion proved a big hit with locked-down shoppers. It was well positioned for the shift to digital and has become one of the fast fashion industry’s top performers. Styles showcased in its vast online shop have been in demand as high streets were forced to shut down and tough restrictions phased in towards the end of the quarter are likely to have seen a continuation of these shopping habits. Crucially, as more customers turned their bedrooms into fitting rooms, they have been sending fewer purchases back and this fall in returns has helped increase margins. With nightlife cancelled though in many parts of the country in the run up to Christmas profits from party wear will be thin. Job prospects are also uncertain for its core group of customers in their 20s and they may be held back on purchases. The company’s shift to promoting more casual wear ranges may have helped maintain demand amid a very uncertain outlook.”

Boohoo, Trading Update, Thursday 14 January

Sophie Lund-Yates, Equity Analyst

“Attention will firmly be on commentary surrounding the ongoing review of boohoo’s UK supply chain. The company was rocked last year following allegations of poor working conditions, low pay, and lacklustre corporate governance. This culminated in the resignation of the group’s auditor, PwC, in October.  Any further news on findings, and progress on mitigating actions will be read closely. We’d like more detail to help us assess how well-equipped boohoo’s management team is. We can’t deny improvement is needed, and the share price will be sensitive to any unwanted information. We’ll be very interested to know if the ongoing scandal has dented sales. On one hand, boohoo’s core, young, demographic is becoming more ethically minded. On the other, the group’s (often outrageously) low price tags could be enough to tempt swathes of shoppers. boohoo has traditionally grown sales at a very impressive rate – thanks to this “pile it high, sell it cheap” mentality. This time last year, sales grew 43%. If we start to see growth slow too much because of a growing backlash, the longevity of boohoo’s entire modus operandi could be called into question.”

Tesco, Q3 & Christmas Trading Update, Thursday 14 January

Sophie Lund-Yates, Equity Analyst

“If Morrison’s Christmas trading statement was anything to go by, smaller gatherings at Christmas won’t have dampened sales over the key festive period. If Tesco follows the trend, sales of traditional festive fare will have skyrocketed. Morrison’s sales rose 8.0% on a like-for-like basis over the peak Christmas season, so this is what we’ll be benchmarking against.

“It will be important to look at any commentary surrounding full year profit expectations. Huge costs associated with Covid-19 means Tesco’s half-year profits shrunk, ignoring the benefits of business rate relief. To protect margins, higher costs need to be offset by increased scale. So, we’ll be looking to see just how much sales rose in the third quarter, especially as November saw the re-introduction of tougher restrictions for much of the UK. This time last year, a highly competitive landscape meant group sales fell 1.4%.

“Tesco is banking on a long-term increase in demand for online delivery slots. At the half year, online accounted for around 16% of UK sales, and we wonder where that figure is now. The latest lockdown triggered another mad rush for too-few delivery slots across the big four and Ocado, so we’ve reason to suspect that 16% is well on its way up.”

ABF, Q4 Trading update, Thursday 14 January

Susannah Streeter, Senior Investment and Markets Analyst

“Lockdowns have hit Primark owner ABF hard given that it doesn’t have an e-commerce arm to offset store closures. The November lockdown alone put a £430 million pound dent in sales and the shuttering of many stores before Christmas in many parts of the UK will have hurt sales further. Remarkably, despite a sizeable hole in revenues, ABF still expected to profits to reach higher levels than last year, although they are likely to be revised down slightly. Primark is proving particularly resilient because of its loyal customer base who have waited until stores re-opened to satisfy their pent up shopping desires. Now a third national lockdown has been imposed though, sales prospects for Q1 in 2021 look bleak but Primark should bounce back as we’ve seen following previous lockdowns. Primark’s strong brand and defiant growth despite Covid-19 causing havoc for sales elsewhere on the high street, means ABF is continuing with plans to take on new retail space particularly in Europe.”

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