Faltering demand for ‘big-ticket’ electrical items and holidays will be measured this week when Dixons Retail and Thomas Cook post results.
Currys and PC World owner Dixons Retail is expected to reveal further sales declines and widening first-half losses on Thursday after a bitter price war with rivals.
The group has been slugging it out with competitors in a battle for survival in a tough electronics market that has seen Best Buy throw in the towel in the UK and loss-making Comet sold for just £2.
When Dixons last updated the market, it said like-for-like sales at its 640 stores in the UK and Ireland were down 10% in the three months to July 23.
It is expected to report further declines in its second quarter, albeit at a slightly slower rate as it comes up against weaker comparatives with the previous year.
The City expects underlying first-half losses to have widened to between £29 million and £35 million, compared with £6.9 million the previous year, mainly as a result of dire trading in Italy and Greece.
Losses at the UK business are expected to be flat at around £10 million as the group offsets the sales falls by making cost savings in its supply chain.
The electronics market has been among the heaviest hit by the squeeze in consumer spending, forcing store chains to put on a raft of promotions.
Dixons’ shares have lost two-thirds of their value over the past two years after it shocked markets with a series of profits warnings.
The first half is normally loss-making for Dixons but analysts will be looking for any indications about current trading ahead of the key Christmas trading period.
Dixons has launched a multi-million pound advertising campaign featuring Star Wars’ Darth Vader in a bid to steal a march on its rivals.
Assad Malic, an analyst at Credit Suisse, said Dixons is well placed to benefit from gaining market share if Comet’s new private equity owners decide to reduce store numbers or decide to close down altogether.
Three of the UK’s biggest water companies will reveal a mixed performance for the industry in half-year results this week.
Leakage rates, higher tariffs and increased infrastructure spending are all likely to be on the agenda for United Utilities, Pennon and Severn Trent.
United Utilities, which covers a population of seven million people and 3.2 million households and businesses in North West England, is forecast by Bank of American Merrill Lynch to record a 5.8 per cent drop in pre-tax profits to £184.8 million on Wednesday.
The supplier has seen revenues rise in the first six months of its fiscal year as tariffs track inflation, but this has been offset by rising costs as a result of higher spending on infrastructure.
Fraser McLaren, analyst at BoA Merrill Lynch, said: “Apart from highlighting areas of progress so far management need to explain what more can be done to reduce costs and improve United Utilities’ sub-par performance.”
South West Water owner Pennon is set to see an 11.6 per cent rise in pre-tax profits to £107.4 million on Thursday, according to BoA Merrill Lynch, thanks to a strong performance from its waste disposal division Viridor.
South West Water, which serves 1.6 million households in Devon, Cornwall and parts of Dorset and Somerset, saw tariffs lift by 8.1% this year and despite a 1.7 per cent drop in demand should see a boost to profits.
But Pennon has said Viridor, which provides recycling, waste and resource management services, continued to turn in a strong performance.
Meanwhile, the subsidiary is set to develop a waste plant in Cardiff, capable of generating 350,000 tonnes energy, after receiving planning permission earlier this year.
Mr McLaren said: “We feel the next six to 12 months could be more challenging given the tough economic backdrop, and risks to volumes and prices could impact sentiment towards waste activities in general.”
The strength of the division should see Pennon make good on its pledge to increase its dividend payment to shareholders by 4 per cent a year between 2010/11 and at least 2014/15.
Severn Trent, however, is expected to report a 1 per cent fall in pre-tax profits to £156.5 million on Friday as higher costs and lower demand overshadow the effect of tariff rises.
The group, which serves more than million customers across the heart of the UK, stretching from the Bristol Channel to the Humber, and from mid-Wales to the East Midlands, has warned of a drop in consumption over the summer.
The water utility also said it is keeping a watchful eye on its level of bad debts after it raised prices by 4.7 per cent in April.
Mr McLaren said: “Recent comments from management highlighted cost pressures in a number of areas such as personnel, power, material, chemicals and infrastructure renewals.”
Meanwhile, the water firm missed its leakage targets last year, mainly due to extreme cold weather so investors will be looking for progress made towards catching up with these targets.
Thomas Cook is expected to report a slide in annual profits on Thursday after unrest in North Africa and plummeting consumer confidence battered sales at the holiday giant.
The tour operator is forecast to disclose a 31 per cent slide in pre-tax profits to £191.1 million in a year which has seen its share price plunge 80 per cent, numerous profits warnings and the exit of its chief executive Manny Fontenla-Novoa.
Thomas Cook recently warned that winter 2011 bookings had declined by 7 per cent in the UK, 6 per cent in central Europe and 16 per cent in western Europe, which includes France, after a summer that was in line with expectations.
The dismal year prompted the holiday group to axe its dividend as it moves to repair its battered finances, which include debts of close to £1 billion.
But Thomas Cook was recently thrown a lifeline in the form of a short term £100 million loan deal with its lenders to boost its cashflow during the seasonal low point of December and January.
Investors will want to know more about Thomas Cook’s turnaround plans after previously announced measures included the closure of 24 of its 800 retail stores and a reduction in its airline fleet from 41 aircraft to six in order to match capacity.
Despite the extra headroom provided by the banks, James Hollins, analyst at Evolution Securities, said the industry was in an “awful state”.
He said: “The outlook for the UK consumer is weak. As their key market, we think this places pressure on the bookings outlook for the leading tour operators, as well as calling into question the sacrosanct status of the annual foreign holiday to consumers.”
Harvester owner Mitchells & Butlers will cap a turbulent year in the boardroom with a drop in profits in its annual results on Tuesday.
The group, which operates 1,600 sites in the UK including All Bar One and O’Neill’s, has struggled with weak trade and is expected to report a 12 per cent decline in pre-tax profits to £154 million for the year.
Mitchells is currently on its second interim chief executive in Bob Ivell.
Mr Ivell took over from Jeremy Blood, who had stepped in after the departure of Adam Fowle, while the company also lost its chairman Simon Burke earlier in the year.
Investors will be looking for reassurance that management recruitment plans are on track after the company saw its share price fall 36 per cent since the start of the year amid fears the frequent changes were hitting performance.
Douglas Jack, analyst at Numis Securities, said any updates on management recruitment or expansion plans next week were key to “unlocking some of the upside” of the business.
Mr Burke’s departure reportedly came after he fell out with billionaire activist investor and owner of Tottenham Hotspur football club Joe Lewis, who owns nearly a quarter of the shares in the company.
Mr Lewis recently tried to buy Mitchells, with a second indicative bid worth £940 million, but his interest was rejected as a “significant undervaluation” of the business. The company currently has a market valuation of about £919.3 million.
But aside from management troubles, the company’s recent performance has been relatively weak, with like-for-like sales slowing to 0.5 per cent in the nine weeks to September 17 from 2.8 per cent during the summer.
Home repairs group Homeserve will give further insight into the impact mis-selling fears have had on the embattled company when it unveils its half-year results on Tuesday.
Homeserve, which insures three million people against burst pipes, broken down boilers and electrical problems, saw its share price slump 50 per cent after it uncovered sub-standard sales processes.
The share price has seen the start of a modest recovery after the firm reassured that “very few” customers had left the business but it has yet to offer guidance on any financial impact.
While the company is on track to meet City expectations of a 12 per cent rise in profits to £131 million for the year to March 2012 it may take a hit from any business lost after suspending outgoing calls.
Mike Murphy, an analyst at brokers Numis, said the impact on the business had been exaggerated.
He said: “We continue to take the view that management’s quick and decisive action to its own review suggested rigour in the compliance process which should reassure prospective partners and should not impact its ability to win new partners.”
Fears persist that next year’s sales will be hit by the current inactivity of its call staff, while the Financial Services Authority could impose a fine if Homeserve is found to have breached rules.
There is also the possibility of compensation for customers if it is found they have been mis-sold a policy.