The consumer spending squeeze will leave its mark on figures from Thomas Cook and Carpetright this week, although Sports Direct should prove more resilient.
Struggling travel firm Thomas Cook is expected to reveal the closure of some 200 travel shops and 1,000 job cuts when it delivers its delayed full-year results on Wednesday.
The country’s second biggest tour operator, which sells more than 22 million holidays a year in the UK, is expected to make the announcement as it unveils a 31 per cent slide in pre-tax profits to £191 million for the year to September.
The board will be under pressure from investors and lenders to slash costs and turn the faltering business around following its plea for help last month.
The 170-year-old company shocked customers and shareholders alike when it put off the publication of its annual results and turned to its banks for additional financial headroom to see it through the weak December/January period.
Thomas Cook secured a £200 million lifeline from its 17-strong syndicate of banks but is now expected to close or sell millions of pounds worth of assets to help reduce its £1 billion debt pile.
The company, which has seen its share price slide 90 per cent since the start of the year, is understood to be planning the closure of 200 of its 1,100 UK travel shops.
Thomas Cook said it needed extra cash after weak consumer confidence hit bookings in the UK and abroad, with its French and Belgium markets recording a 20 per cent slide in bookings.
The group has also suffered from the impact of the Arab spring, which has hit bookings to Tunisia and Egypt, destinations popular with France and Russia respectively as well as UK holidaymakers.
The country’s largest floor-covering retailer Carpetright is expected to reveal its worst first-half profits as a listed company on Tuesday as the consumer spending squeeze takes its toll.
The carpets, flooring and beds group, which has 503 stores in the UK and 643 in total, is forecast by analysts at Singer Capital to report pre-tax profits of £1.2 million in the six months to October 30, compared with £10 million the previous year.
The group has come under pressure as the housing market remains subdued and household budgets are stretched, leading it to report a 3 per cent drop in UK same-store sales for the 12 weeks to October 22.
Chairman and chief executive Lord Harris, a veteran of the retail sector with more than 50 years experience, warned that heavy promotions and a higher proportion of beds in the sales mix hit profitability at the chain, which has issued three profits warnings this year.
Matthew McEachran, an analyst at Singer, said: “We believe this will be the worst interim result in Carpetright’s history as a listed company, driven mainly by the UK.”
Investors, who have seen the company’s share price plunge more than 43 per cent since the start of the year, will be looking for updates on its cost-cutting measures, which have included store closures.
Carpetright expanded its beds business earlier in the year, meaning it now represents around 6 per cent of revenue, while a roll-out of a new laminate flooring offering is under way.
Recent falls in the cost of filling up a petrol tank, supermarket price wars and high street special offers are expected to have driven down the official rate of inflation in November.
The consumer prices index (CPI) measure of inflation fell to 5 per cent in October from its three-year peak of 5.2 per cent in September.
The Office for National Statistics (ONS) is expected to reveal on Tuesday that the figure continued to slide to 4.8 per cent last month.
That would indicate that the squeeze in households’ living standards is continuing to ease, although the rate of inflation is still more than double the Bank of England’s official 2 per cent target.
The Bank expects CPI to fall back to its 2 per cent target over the next two years and if November’s figures provide further evidence of this trend, it will have more scope to ramp up its quantitative easing money printing programme in a bid to boost the UK’s ailing economy.
The main drivers behind the easing in inflation were the supermarket price wars as chains slug it out for cash-strapped shoppers, while falling grain prices have also moderated price rises of staple items, such as bread.
And the grim conditions on the high street, made worse by the unseasonably mild weather in the autumn which hit winter clothes sales, has prompted a flurry of promotions from retailers, which has also helped bring down the cost of living.
According to the AA, the price of unleaded petrol fell slightly to an average of 113.7p per litre in November, contributing to a 0.1 per cent drop in the CPI calculations of economists at Investec Securities.
However, the cost of heating a home has risen substantially in recent months and will continue to offset some of these falls, with EDF pushing through price hikes in the month, the last of the big six suppliers to do so.
The owner of the Superdry fashion label will shed more light on how recent stock supply problems have impacted its performance.
The company, which has 70 stores in the UK branded as Superdry and Cult, has already warned that profits for the financial year to April will be between £6 million and £9 million below forecasts due to lost sales and temporary warehousing.
Supergroup revealed the IT problems during an upgrade to a new warehouse in Gloucestershire had triggered a “significant” reduction in the amount and range of sizes reaching its stores.
The group was a stock darling in 2010 but has lost 70 per cent of its value since its peak in February despite consistently robust sales growth and an aggressive expansion plan.
Nick Bubb, an independent retail analyst, expects the unusually warm autumn weather to have hit recent trading by putting people off buying winter clothes.
He said: “I’m afraid that the recent mild weather will mean trading has fallen short of expectations and they are going to have to admit that profits will be disappointing.
“They benefited a year ago when the cold weather helped them to sell winter ranges. But that has left them with tough comparatives from a year ago when they were flying.”
The group, which was founded in 1985 by chief executive Julian Dunkerton from a market stall in Cheltenham, has grown rapidly based on its Superdry range of T-shirts, jeans, sweaters, hoodies, jackets, bags and accessories, which have proved a hit with celebrities such as footballer David Beckham and actor Zac Efron.
Mobile betting has driven growth at online gambling firm Betfair in the first half of the year as more punters place wagers on devices such as iPhones and iPads.
Betfair, which allows punters to set their own odds and bet against one another, is expected to reveal an 18 per cent increase in underlying earnings to £42 million and a 1 per cent rise in revenues to £169 million as the boom in mobile gambling is offset by tough comparatives against last year’s World Cup.
Betfair, which floated on the London Stock Exchange in October 2010, has seen mobile customers more than double, while a third of all bets are now placed on a mobile device.
The group recently announced the appointment of a new chief executive, Breon Corcoran, who will join the firm from rival Paddy Power in August.
Andrew Lee, equity analyst at Jefferies, said the appointment removed any uncertainty surrounding the future, and was a positive move for the group.
The company’s stock market listing represented a major landmark for founders Andrew Black, a one-time professional gambler, and former City trader Edward Wray.
Its shares floated at 1300p in October and peaked at 1500p but have fallen 20 per cent since the start of the year.
Newcastle United owner Mike Ashley’s Sports Direct has weathered the storm on the high street this year and is expected to underline its resilience with a solid set of half-year results on Thursday.
The company, which has 390 stores and owns brands including Slazenger, Dunlop and Karrimor, are forecast by brokers Oriel Securities to report a 2 per cent increase in pre-tax profits of £103 million in the six months to the end of October, compared to a strong half last year boosted by the World Cup.
The group has taken advantage of the weak competition in the sportswear retail sector, with the likes of JJB Sports struggling to cope with the consumer spending downturn.
Meanwhile, the company claims its bonus scheme has continued to incentivise staff, which requires targets to be hit in each year.
Looking ahead, Jonathan Pritchard, analyst at Oriel, said the business is set to get stronger and it was “hard not to be excited by the Olympic opportunity”.
He said: “The retail sector has largely been in disarray for the last six months but Sports Direct’s progress in terms of profit delivery has been stately.”
Elsewhere, investors will be interested to see if Sports Direct gives any hint at its interest in outdoor clothing retailer Blacks, after the company put itself up for sale.
Sports Direct is already Blacks’ biggest shareholder and launched a failed bid for the company in 2010. It is understood Sports Direct will only purchase the business or its brands through administration if it becomes insolvent.