Mindful Money’s weekly shares watch: Burberry, Dixons Carphone & Sports Direct International

13th July 2015


With Burberry shares down by some 13% over the past three months investors will be eager to hear some positive news when the group reports its first quarter trading update on Wednesday.

Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers notes that after the firm, famous for its distinctive check design, delivered some broadly cautious full-year 2015 outlook comments, comparable sales are expected to slip to between 6% and 7%, from 9%.

Graham Spooner, investment research analyst at The Share Centre highlights that confidence is being sapped as China experiences weaker growth rates and a fairly severe stock market correction. Spooner, however is calling the shares a ‘buy’, while the analyst consensus opinion currently points towards a ‘strong hold’. He adds: “Retail investors losing on their investments could cut back on luxury spending. Other than this, investors may want to hear of plans for the remainder of the year, such as store openings and progress made in newer areas such as perfumes and men’s accessories.”

Electronics retailer, Dixons Carphone, up 3% over the last three months, reports its full year results on Thursday. These upcoming numbers will be keenly watched as they represent the first 12-month figures following the merger of Dixons and Carphone back in August 2014.

Spooner, who has the firm down as a ‘buy’ notes the business reported strong fourth quarter trading at the beginning of June and followed that with good news on a joint venture with US telecoms group Sprint last week.

He says: “With these results investors will be interested to see whether the company can meet its forecast profit guidance, which is slightly above the top end of the £355m-£375m range previously suggested. There will also be interest in the level of TV sales following news of a poor performance in that area from some rivals recently, and any news on trading in Europe will attract attention given events in the Eurozone at present.”

The general outlook for the group remains bullish. Bowman says: “With market share gains recently achieved and the company seen as a likely beneficiary of the expected growth in the so called ‘internet of things’, analyst consensus opinion currently signifies a ‘strong buy’.

Sports Direct International also publishes its own set of full-year numbers on Thursday. Looking ahead to the update Spooner asserts that first and foremost the market will want to see where the EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) figure comes “in relation to the forecast it provided at the end of May for £360m to £380m”. The Share Centre, in line with the market consensus is calling the retailer a ‘buy’. Spooner says: “There will also be interest in how trading has performed in May and June, especially in the group’s European stores. Any update on the strategy to expand into overseas markets and news on the level of online sales will also be a major focus for investors.”

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