Byline: By HUGO DUNCAN AND DAVID WINNING Western Mail
Retailers will dominate the corporate agenda next week with Woolworths and Sainsbury's both updating on recent trading. And investors in the housebuilding sector will use half-year results from Barratt Developments to check on signs of improving confidence among buyers.
Investors will get a snapshot of the state of the high street on Wednesday when Woolworths posts its annual results.
The retailer enjoyed healthy Christmas sales of toys, while demand for computer games and MP3 players soared, but has since warned of a profits blow going forward after its wholesale distribution arm lost a key contract with Tesco.
In January, Woolies predicted pre-tax profits for the year to January 28 would be between pounds 50m to pounds 60m compared with pounds 66.9m the previous year.
Deutsche Bank forecasts pre-tax profits of pounds 52m and said it was looking for news of the current trading environment as it played down chances of Woolies becoming a takeover target.
Sainsbury's delivers a fourth-quarter trading update on Wednesday and recent market share data implies that the supermarket giant has maintained some of the momentum built up over the Christmas period as a result of better ranges and improved product availability.
Barclays Stockbrokers forecasts like-for-like sales growth of 2% excluding petrol. Although this is lower than the 5.2% recorded in the third quarter, it reflects tougher comparatives against the final three months of the previous year.
There may also be an update on Sainsbury's plans to add GP surgeries to branches around the country as the company looks to become a key partner in the Government's bid to bring healthcare to the doorstep.
Last month the company said chief executive Justin King had met Health Minister Caroline Flint to discuss the proposal and that further meetings were planned with the Department of Health.
Book seller Ottakar's is expected to post a large fall in profits tomorrow after heavy discounting at rivals such as Waterstone's and online rival Amazon.com hit sales, especially over Christmas.
In January the company said it had struggled to compete with promotions on the high street and the internet and analysts believe that trading has remained disappointing so far in 2006.
Teather & Greenwood said it expected pre-tax profits at Ottakar's - which is subject to a bid from Waterstone's owner HMV that is being investigated by the Competition Commission - to fall from pounds 7.1m to pounds 1.5m.
Barratt Developments may have lost its place as the UK's largest housebuilder to Persimmon, but its core business remains strong and broker Charles Stanley expects it to post half-year profits of pounds 176m when it updates the market on Wednesday.
That figure would represent a slight improvement on the haul of pounds 171.1m that it banked last year and comes in spite of the slowdown in the housing market, with Barratt benefiting from its additional focus on social housing and low-cost homes.
A trading update from Barratt in January stated that its land bank had increased to 63,000 plots from 59,400 a year earlier, which was the equivalent to more than four years' supply. Forward sales were about 75% of its target for the current financial year.
Tom Gidley-Kitchin, of broker Charles Stanley, said there was nothing to suggest that the company will be able to perform better than its rivals over the next two years, but it offered investors a relatively safe haven.
He said, 'It should benefit in comparison with Taylor Woodrow and Wimpey if there is a US housing downturn, the lack of debt will be protective in any bad times in the UK, the pensions deficit is not large, the affordable/social housing protects revenues and the rating is undemanding.'
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