The Week Ahead: M&S to inflict more sales misery on investors

A cloud hung over Marks & Spencer shares for most of last week, with dealing rooms awash with talk of dire trading at the troubled retailer.

A cloud hung over Marks & Spencer shares for most of last week, with dealing rooms awash with talk of dire trading at the troubled retailer. If you believe the speculation, M&S has experienced a sharp drop in sales in its homeware, womenswear and menswear ranges, and as a result tomorrow's interim figures could well be accompanied by a profit warning.

The anxiety seems to stem from a note from Seymour Pierce. In it, Richard Ratner, the brokerage's retail analyst, suggested that menswear and womenswear sales had dropped by 12 and 18 per cent respectively during the final week of October, and that homeware sales had crashed 27 per cent. Things are tough on the high street but such a performance, if true, would point to a sales meltdown.

However, it is far from clear whether M&S plans to update the market on current trading when it unveils its first-half numbers. Williams de Broe believes that Stuart Rose and his new team need not worry too much about the group's near-term performance. It takes the view that M&S's top brass will not start to make their presence felt on the clothing business until this time next year. Hence, few will pay much attention to the 11 per cent drop in profits the retailer is expected to register at the interim stage.

TODAY: British Airways is forecast to unveil an 8 per cent rise in second-quarter operating profits to £210m thanks to improving levels of long-haul travel and tighter cost control. There are risks to this prediction, chief of which is the growing competition BA faces on short-haul flights from low-cost carriers.

Results: Full year - Carr's Milling; Disperse Technologies; Imperial Tobacco; VTR. Interims - British Airways; Uniq.

TOMORROW: Results: Full year - Ferraris Group. Interims - Big Yellow; Comino; CSR; Dicom; Electrocomponents; Kewill Systems; Marconi; Marks & Spencer.

WEDNESDAY: The last six months have been something of a rollercoaster ride for Dairy Crest. It first suffered the loss of a substantial milk contract with Asda, and then Tesco, only to go on and win a deal with Sainsbury's. According to brokers, the Sainsbury's deal only partly makes up for the previous two losses but talk in the City suggests that this is now very much reflected in Dairy Crest's share price. The group is now targeting Somerfield and Morrison in the hope of winning new business.

Meanwhile, its interim results should show that the company is achieving strong growth from its branded dairy products. These products are believed to be seeing volume increases of about 10 per cent. They include such names as Petit Filous, Yoplait, Cathedral City, Utterly Butterly and Clover. First-half profits from Dairy Crest are expected to come in slightly above the £36m registered last time around.

Results: Full year - AB Foods; Fenner. Interims - Aveva; Cable & Wireless; Dairy Crest; Peacock Group; Scottish Power; Volex; Yell Group.

THURSDAY: On several occasions over the past 18 months various City analysts have called the end of the downturn which has blighted Invensys for years, only to be disappointed. Whispers to that effect have again started to surround the company in recent weeks and have driven the engineering conglomerate's stock higher. So is Invensys on the up or will it yet again fail to live up to hopes? The group's second-quarter results and accompanying outlook statement should go some way to answering this question. As it stands, Invensys is expected to post earnings before interest and tax of £60m, down from £75m last time.

Pre-tax profits for the first nine months of Royal & SunAlliance's year are tipped to soar to £445m from £27m seen last year. The reforms the insurer's management team have put in place, including a £960m rights issue, should now be paying dividends at RSA although 2004 has been labelled as a "transition year". Looking at the third quarter in isolation, Williams de Broe expects the group to notch up a sharp recovery on the disastrous £324m of losses it posted in 2003. The broker has pencilled in a £155m profit from RSA.

Results: Full year - Punch Taverns. Interims - BG Group; Big Food Group; BT Group; BTG; London Stock Exchange; Royal & SunAlliance; Wincanton; Invensys.

FRIDAY: BSkyB's first-quarter results will be the first set of numbers the satellite broadcaster has unveiled since its new strategy in August. Analysts believe the marketing blitz the reforms heralded are unlikely to have made much of an impact at this early stage. The consensus in the City is that Sky will have gained 40,000 to 50,000 new subscribers for the quarter just gone. A much better performance is predicted from the broadcaster's second quarter.

Results: Full year - Minorplanet. Interims - Hornby; BskyB.

Economics Diary

TODAY: UK - CBI national conference; producer price inflation (Oct); ODPM house price survey (Sep); BRC retail sales monitor (Oct). G10 - central bankers meet.

TOMORROW: UK - Gordon Brown at CBI conference; trade in goods and services (Sep) EU - trade (Sep). Germany - ZEW business survey (Nov).

WEDNESDAY: UK - Bank of England Inflation Report. Japan - current account (Sep). Germany - trade balance (Sep). France - industrial production (Sep). US - interest rate decision; weekly jobless claims; trade balance (Sep).

THURSDAY: ECB - Monthly Bulletin (Nov). Germany - GDP (1st estimate) Q3. US - public holiday.

FRIDAY: Japan - GDP (prelim) Q3; industrial production (Sep). France - GDP (1st estimate) Q3. Italy - GDP (1st estimate) Q3. US - retail sales (Oct); business inventories; Michigan consumer sentiment survey (prel) Nov; FOMC minutes (Sep).