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The week ahead: Home Retail Group to report on trading

The second week of Christmas trading updates moves on to retailers battling against the rise of the internet and structural changes in their sectors.

HMV, which is scheduled to report Christmas figures on Thursday, is under pressure from tumbling sales and is trying to agree a deal with banks because of a likely breach of debt covenants this month. At the weekend it launched a month-long 25pc-off sale in an attempt to boost revenues. Other retailers battling against declining markets are Home Retail Group, parent company of Argos and Homebase, and Mothercare.

Argos is set to reveal a “subdued” performance. Analysts predict the business saw like-for-like sales growth ease back to 0.2 per cent in the third quarter as the benefit of the early launch of the group’s autumn/winter catalogue is reversed.

Third quarter like-for-like sales at stablemate Homebase are forecast to drop 2.1 per cent, with a subdued DIY market over Christmas and trade also hit by the severe wet weather.

The first week of trading figures saw Wm Morrison and Marks & Spencer emerge as the losers with sharp declines in like-for-like sales. However, Sainsbury’s and Tesco recorded a rise in sales, showing that growth is possible for retailers despite conditions on the high street.

Inflation will be making the headlines again this week when the consumer prices index edges closer to 3pc. The official figures are out on Tuesday and are expected to show CPI rising from 2.7pc to 2.9pc. If it climbs above 3pc in the coming months, as predicted, the Bank of England Governor will have to start writing letters of explanation to the Chancellor again.

December’s CPI rise is expected to have been caused by energy and utility bill hikes. September’s 2.2pc low is beginning to feel like a distant memory. For those that were hoping to see the first print of RPIJ – the alternative calculation of the retail prices index unveiled last week – you will have to wait until March.

Tuesday also promises to provide further evidence that the housing market is showing signs of life. RICS’ monthly report is expected to show that surveyors are growing more optimistic about prices and sales.

Source : The Telegraph

13 January 2013
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