Mindful Money’s weekly shares watch: Whitbread, Home Retail Group, Debenhams & William Hill

19th October 2015


Costa Coffee and Premier Inn owner Whitbread has achieved strong growth from both businesses this year and shareholders will be eager for more positive news when it delivers its interim results on Tuesday.

While its shares are 15% higher over 12 months they have eased by 11% over the past three but ahead of the update, the consensus has the stock down as a ‘buy’.

Looking ahead to the firm’s report, Graham Spooner, investment research analyst at The Share Centre who is backing the shares says: “The market will be hoping to hear that sales remain strong in the UK. Any news on how the expansion of both brands is progressing will also be of interest to investors. There will also be continued focus on the impact of the new living wage, which starts next year, and Whitbread’s plans to cope with the additional costs it involves.”

Argo and Homebase parent Home Retail Group, down 13% over the past six months, provides its half-year results on Wednesday.

Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers notes that the update comes against what were marginally disappointing Argos second quarter like-for-like sales, down 2.8% and a flagged increase in second half marketing costs for the division.

He adds: “On the upside, more favourable trading at Homebase is likely to be further underlined, whilst an update on its store closure programme and the productivity plan could be forthcoming. Ahead of the results and with a yet to convincingly inspire Argos business pitted against speculative hopes for an eventual sale of its restructured Homebase division, analyst consensus opinion currently points towards a ‘strong hold’.”

High Street stalwart Debenhams follows-up with its full year results on Thursday. Over the past year, its shares have surged by 39% and Bowman highlights that aided by its management’s push towards less promotional and more full price sales, pre-tax profit is currently expected to edge marginally higher year-over-year, at 1.2%, to around £111.7m. He says: “Prior to the announcement and with management initiatives set against ongoing fierce competition across the UK clothing arena, analyst consensus opinion currently signifies a ‘hold’,” adds Bowman.

Friday sees William Hill, down 14% over three months, publish its third quarter trading update. Revenues were flat for the bookmaker in the first half with profits hit by regulatory measures and extra taxes on the sector. However, Spooner notes that investors will be hoping that major sporting events such as the rugby world cup, European Championship qualifiers and the return of the Premier League will have given third quarter revenues a boost.

Spooner, who inline with the broader sentiment is calling the firm’s stock a ‘buy’ adds: “The market will be looking for an update on how expansion into new regions such as Australia and the US is progressing, as well as the performance of key growth channels such as online and mobile.”

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