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PREVIEW: Will JD Sports reveal another outperformance?

Published: 15:08 14 Apr 2016 AEST

JD Sports store, a retail outlet for trainers, running shoes and apparel

Hot on the heels of Wednesday’s Tesco show, Thursday’s early attentions will likely remain upon retail stocks.

It is a busy day for trading updates in the sector - from department stores to discounters.

Also reporting on Thursday are recruiters, house bulders, soap-makers and money lenders.

Will JD Sports Fashion Plc (LON:JD.) reveal another ‘outperformance’?

Well, that’s what Panmure Gordon analyst Peter Smedley reckons ahead of Thursday’s finacials.

“We expect JD to deliver a sixth consecutive outperformance of consensus expectations over the past year alone,” he said in a note. Earlier this week the broker upgraded its forecasts for 2016, 17 and 18.

Smedley also highlighted Nike’s positive Q3 showing in western Europe, which showed 23% growth in orders for ‘athletic footwear’ as well as other key brands stocked by JDs: such as Adidas, Puma and Under Armour.

He says the sports clothing and footwear markets remain very strong, especially at the premium end of the market for which JD caters.

Panmure forecasts a full year revenue figure of £1.82bn, and a £156mln pre-tax profit.

Debenhams Plc (LON:DEB) interims seen slightly higher after ‘solid’ Christmas

Expectations are reasonable positive ahead of the department store’s interims, follow’s January’s trading update which indicated a ‘solid’ Christmas period.

Numis analyst Andrew Wade expects to see growth at the bottom line when the six monthly results are released.

“Looking ahead to the interims, we expect an H1 PBT of £91.8m, c.3% ahead of last year and, while we remain wary of the structural challenges facing the business, we are encouraged that management is addressing the issues it can, including reduced promotional activity, concessions to better utilise underperforming space, and a more restrained approach to buying,” the analyst said in a recent note.

Will Mothercare plc (LON:MTC) margins be at lower end of guidance?

International business let Mothercare down in the third quarter, and continuing currency headwinds suggest it may again. But, Numis analyst Matthew Taylor reckons trading in British stores were in ‘good shape’ through the January sales period and the start of the fourth quarter.

He cautioned, however, that gross margins may be at the lower end of guidance and also warned that there could be some weather related negative impacts on sales of spring clothing.

Poundland Group Plc’s (LON:PLND) 99p Stores takeover expected to show growth

Deutsche Bank analyst Charlie Muir-Sands reckons trading was tough for deep-discounters like Poundland, and he expects the see that underlying trends in the sector remained weak.

But - and it is a pretty big but – the analyst said in a note last week that the conversion of 99 Stores to the Poundland operation is on-track and the progress will reassure the market. Muir-Sands said the contribution from 99p Stores could be nearly three-times the company’s prior earnings guidance of £25mln.

An upcoming roll-out of the Dealz branded stores in Spain present further possible catalysts, he added.

More margin pressure expected for Burberry Group Plc (LON:BRBY)

A trading update for the designer clothing group is, according to RBC Capital Markets, going to show flat financial comparatives for the fourth quarter, to the end of March.  Analyst Rogerio Fujimori forecasts total second half revenues of £1.46bn, which would represent just 1% underlying growth.

“Management continues to do all the right things for the brand in the long term, but the combination of opex-deleverage, PRP reinstatement and further drop in Japanese licensing revenue should lead to further margin pressure and below sector-average EBIT growth in FY17-18E,” he said in a note.

Other anticipated trading announcements

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