Friday preview: Sports Direct earnings due; US GDP eyed
Like the weather, things are set to cool off a little on the UK corporate front on Friday after a busy week, although results from Sports Direct and a trading update from Vodafone are due.
Sports Direct will be in focus as it releases its full-year results. Shares in the retailer tanked earlier this month after it said the results were being delayed due to the "complexities" of integrating House of Fraser and that guidance from December could be "materially" affected.
However, the stock perked up on Wednesday after the company confirmed that results would be published at the end of the week and would be in line with the guidance given in December.
Sports Direct said in its interim results at the end of last year that full-year underlying EBITDA growth would be between 5% and 15%. Including HoF, it said the results would be behind the previous year.
Vodafone is also set to put out a trading update for the first quarter. UBS pointed out that the company will now be reporting on an IFRS15 basis and has indicated that Q1-20 service revenues trends will be similar to Q4 2019, down 0.7% on an IFRS15 basis.
"Service revenue trends should gradually improve thereafter helped by easier comparables in Spain/South Africa. In terms of changes quarter-on-quarter, we expect to see an improvement in Italy as Vodafone laps the drag from the reversal of 28 day billing back to monthly billing that should lead to Italian service revenues improving to around -4% in Q1-20 versus -7.0% in Q4-19."
UBS said it expects Vodacom to weaken given data repricing/changes to out of bundle pricing in South Africa. In Spain, it expects service revenues to weaken marginally towards -9% in Q1-20 from - -7.9% in Q4-1. However, it said declines should theoretically start to bottom out from Q2-20 as Vodafone laps price cuts it made last year as part of its commercial repositioning.
"We expect UK and Germany to see broadly similar trends to the prior quarter," it added.
On the data front, there are no major UK releases to watch out for but second-quarter US GDP data will be eyed.
"The first cut of 2Q GDP will be much more a story of the internals than the headline," RBC Capital Markets said. "This is owing to the likelihood that inventories will act as a significant drag on topline growth. Inventory tracking is always highly uncertain, but the best evidence we have in-hand suggests the swing in this component will subtract about 1.4ppts from headline growth.
"Accordingly, our estimate of a mere 2.0% topline real GDP 0 and any realised outcome near that - should be taken with a grain of salt. Beneath the surface, the most important component of GDP - the consumer - is poised to print at north of 4% real sequential growth.
"This, coupled with some modest advances in residential and non-residential fixed investment, leaves the crucial final sales (ex-inventories) component at a 3.4% pace for the quarter - which would go down as the second-best print of the last 16 quarters."
Friday July 26
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Aberforth Smaller Companies Trust, Greencoat UK Wind, IMI, Kcell Joint Stock Co GDR (Reg S), Rightmove
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Character Group, Chrysalis VCT, Gooch & Housego, Hargreave Hale AIM VCT , Paragon Banking Group, Up Global Sourcing Holdings
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GDP (Preliminary) (US) (13:30)
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