Stocks to watch next week: Greggs, Tesco, JD Wetherspoon, Nike and Levi's
The coming week is set to be busy one in markets for high-street favourites, as a number of household names are set to report earnings.
In the UK, investors will be looking to see if sausage roll maker Greggs can serve up another impressive trading update, having beaten expectations once again in the first-half.
Markets will also be waiting to see if supermarket Tesco is still on track to meet its full-year operating profit expectations.
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Pub chain JD Wetherspoon will also reveal whether its full-year results have met expectations and offer guidance for the coming year that matches consensus forecasts.
Sportswear brand Nike will be in focus, as investors look to see how the company is faring ahead its change in CEO in a couple of weeks.
Meanwhile, Wall Street will be watching to see if denim brand Levi's can deliver any improvement on revenues and earnings.
Here's what to look out for:
Greggs (GRG.L) — Reports third-quarter trading update on Tuesday 1 October
Another set of strong results in the first-half, propelled shares in food-on-the-go retailer Greggs higher, with the stock up 19% year-to-date.
In its interim results released in July, Greggs posted nearly a 14% increase in sales for the period to £961m and a 16% rise in underlying pre-tax profit to £74m.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: "Greggs has set a high bar over the past year or so and continues to impress."
"Menu tweaks, a focus on the evening market, new delivery options, and a push for penetration on the app have all worked together to deliver outperformance," he said.
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In its half-year presentation, Greggs said its newer over-ice drinks range was proving popular with customers, as well as sharing fresh additions to its healthier choices range with pesto chicken and spicy bean flatbreads.
Greggs also said it sees "significant long-term opportunity" in the evening market and reported growing use of its Greggs Rewards scheme.
Investor attention now turns to its third-quarter trading update on 1 October. Britzman expected there to be a slowdown in like-for-like sales over the second half of the year "as Greggs laps tougher comparable periods from last year".
"But with the store estate expanding and plenty of growth drivers, the outlook remains positive," he added.
Tesco (TSCO.L) — Reports half-year results on Thursday 3 October
Shares in supermarket Tesco are up 24% year-to-date, rising back up to its highest level since 2014.
Russ Mould, investment director at AJ Bell and Dan Coatsworth, investment analyst for the platform, said Tesco was "taking full competitive advantage of the woes of Morrisons and Asda, which are struggling under the debt burdens shovelled on by their private equity buyers".
They highlighted that Tesco had picked up slightly more market share, retaining the top spot, according to Kantar Worldpanel data.
In the first quarter, Tesco reported that like-for-like sales had risen 3.6% to £14.3bn in the UK and the Republic of Ireland.
The supermarket chain also reiterated full-year guidance, saying it expected retail adjusted operating profit of at least £2.8bn.
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In addition, the company said it expected the parts of the Tesco Bank business that it retained to deliver a total adjusted operating profit of around £80m. Tesco announced earlier in the year that Barclays (BARC.L) was buying Tesco Bank's credit cards, loans and savings accounts business. Meanwhile, Tesco was holding onto its bank's insurance, ATM, travel money and gift card operations.
"Those forecasts imply little or no progression in the operating margin in the year to February 2025, at just above the 4% mark," said Mould and Coatsworth.
"Such a lowly margin ... hardly smacks of price gouging, despite some persistent accusations to the contrary, and the group profit margin is no higher now than it was before the pandemic," they said.
The supermarket also maintained its target of generating between £1.4bn and £1.8bn in free cash flow, with this liquidity helping to fund cash returns to investors.
"Tesco is running a £1bn share buyback and consensus estimates suggest the grocery giant will raise its full-year dividend to 13p a share from 12.1p," said Mould and Coatsworth.
They added that investors would be looking for further updates on its deal with Barclays, given this is expected to close towards the end of its fiscal year. Tesco said the deal is set to release around £1bn, the majority of which it plans to return to investors through further buybacks.
JD Wetherspoon (JDW.L) — Reports full-year results on Friday 4 October
JD Wetherspoon’s shares have remained largely flat over the year, despite the pubs group, which operates around 800 locations, being poised to report record sales for the year ending July 2024.
AJ Bell analysis said the stagnation in its share price reflected concerns over profitability, with rising wages, higher utility bills, and increased interest costs on its £670m net debt weighing on the company’s bottom line.
In a trading update in July, chairman Tim Martin noted that full-year results are expected to meet expectations. Analysts currently anticipate revenues of just over £2bn and pre-tax income of £72m, up from £1.9bn and £43m, respectively, in the previous year. However, attention is shifting to early signs of performance in the new fiscal year, with a focus on like-for-like sales growth, which reached 7.7% in fiscal 2024 (up to July 7).
Investors are particularly keen to understand the balance between price and volume growth, as well as the performance split between bar sales, food, and other offerings. In the first half of the year, bar sales rose 11.6%, compared to food's 7.6%, gaming machines’ 10.5%, and a modest 2.8% increase in hotel and room revenues.
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Input costs remain a key concern for Wetherspoon’s outlook, as the company grapples with a 10% rise in the national living wage, food price inflation, and potentially higher utility bills.
Looking ahead to fiscal 2025, consensus forecasts suggest sales will rise to £2.1bn, with pre-tax income projected to reach £84m.
JD Wetherspoon has not paid a dividend since 2019, when the onset of the pandemic disrupted its operations. However, the company did execute a £40m share buyback in the first half of fiscal 2024, far exceeding the value of the 12p-a-share dividend it paid between 2011 and 2019. Any future cash returns to shareholders will depend on profitability, but also on the company’s investment priorities.
AJ Bell said a final potential headwind for JD Wetherspoon is the UK government’s proposed ban on smoking in outdoor public spaces, including pub gardens and outdoor seating areas. This could pose a significant challenge to the company’s drinks sales, particularly in its pubs with large outdoor spaces. Investors will be watching closely for any comments from Martin on how the company plans to navigate this regulatory shift.
Nike (NKE) — Reports first-quarter results on Tuesday 1 October
Ahead of the release of Nike's first-quarter earnings, Deutsche Bank (DBK.DE) lifted its price target on the stock, to $95 per share from $92.
Deutsche Bank cited the company's recent change in CEO and believed the sportswear brand is poised for a turnaround, expecting it to reiterate full-year guidance in the upcoming results.
Earlier this month, Nike announced that John Donahoe was set to retire from the role of CEO and president on 13 October, with Elliott Hill returning to the company to take over these positions.
Shares jumped following the news, having plunged back in June following the release of its fourth-quarter results and are down 18% year-to-date.
Nike said it expected revenues to decline 10% in the first quarter and to fall mid-single digits in 2025.
In the fourth-quarter, Nike said it revenues fell 2% from the previous year to $12.61bn, which was also below Wall Street estimates of $12.86bn.
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"We are taking our near-term challenges head-on, while making continued progress in the areas that matter most to Nike's future – serving the athlete through performance innovation, moving at the pace of the consumer and growing the complete marketplace," said Donahoe.
Investors have been keeping an eye on its product pipeline, particularly in the athletic footwear space, with competition from upstart brands On (ONON) and Deckers' (DECK) Hoka.
In the UK, the Advertising Standards Authority (ASA) said earlier this week that it had banned adverts from Nike, as well as Sky, that it believed has used tactics that had misled customers to unintentionally spend more money.
A spokesperson for both Nike and Sky was not available to respond to Yahoo Finance UK's request for the comment at the time of writing.
Levi Strauss (LEVI) — Reports third-quarter results on Wednesday 2 October
Levi Strauss & Co., the denim brand, is poised to release its third-quarter 2024 earnings results on October 2, with Wall Street analysts projecting a slight improvement in both earnings and revenues. Forecasts suggest a 2.6% year-over-year revenue increase to $1.55bn, alongside a 10.7% rise in earnings per share (EPS) to $0.31.
Levi Strauss has enjoyed notable share price growth, up 32% year-to-date and 67% over the past 12 months. The company’s financial performance has been underscored by its ability to surpass consensus EPS estimates for nine consecutive quarters.
However, the company now faces growing macroeconomic headwinds, with rising inflation threatening to curb consumer spending on discretionary items like apparel, potentially injecting volatility into future results.
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While Levi's missed sales expectations in its second-quarter earnings report in June, the brand remains optimistic about the long-term prospects of denim. CEO Michelle Gass told analysts that demand for denim has never been stronger, especially for products beyond jeans, including skirts and dresses.
Estimates from analysts covering Levi Strauss & Co. showed that the company is poised for earnings growth, projected to expand by 72% annually over the next three years. This anticipated growth outpaces the broader market's forecast of just 10% annual growth during the same period.
In a recent development, Levi Strauss sparked excitement on social media by hinting at a potential collaboration with Beyoncé, which briefly boosted its share price by 1% on Monday. Despite this positive momentum, Levi's shares remain 33% below their peak in 2021.
Other companies reporting next week include:
Monday 30 September
Playtech (PTEC.L)
Bango (BGO.L)
James Halstead (JHD.L)
Tuesday 1 October
McCormick (MKC)
Wednesday 2 October
JD Sports Fashion (JD.L)
Topps Tiles (TPT.L)
Novagold Resources (NG)
Conagra Brands (CAG)
Thursday 3 October
Galliford Try (GFRD.L)
Constellation Brands (STZ)
You can read Yahoo Finance's full calendar here.
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