Tesco and M&S to report on Christmas revenues

Tesco set to emerge a winner
Tesco set to emerge a winner

Retail heavyweights Tesco and Marks & Spencer will come under the spotlight this week as they become the latest high street firms to shine a light on Christmas trading.

City analysts expect M&S to post a disappointing set of third-quarter figures, with house broker Shore Capital saying that it cannot rule out a downgrade to its profit forecasts.

In food, Shore is pencilling in a 3% decline in comparable sales in the three months to the end of December following a weak October and November for the UK grocery sector as a whole.

The figures, out on Thursday, will come at a time of severe upheaval at the chain.

M&S recently drafted in former Sainsbury’s boss Justin King to join the board as a non-executive as the firm undergoes the next phase of a drastic transformation plan under boss Steve Rowe.

George Salmon, equity analyst at Hargreaves Lansdown, said: “M&S is closing dozens of mainline stores as part of its current restructuring and that will inevitably mean total sales are lower this Christmas.

“Given the troubles affecting the wider high street and the group’s lack of a material online offer, it’ll come as no surprise to hear we’re not expecting pretty things from Marks next week.”

Conversely, Tesco is set to emerge a festive winner, with analysts at Barclays forecasting a 1.3% rise in UK like-for-like sales in the six weeks to January 5.

The bank’s retail analyst James Anstead said: “As with Morrisons and Sainsbury’s, we think Tesco should benefit over the Christmas period from the lack of weather disruption (which hit in mid December 2017) and the presence of an additional ‘full day’ of shopping.

“Tesco may also have a benefit from the fact that last year’s Christmas saw an impact ... as a result of the disruption from Palmer & Harvey’s collapse.”

However, Barclays also predicts that, for the third quarter as a whole, Tesco will see comparable sales growth slip to 0.8% from 2.5% in the previous three months.