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Earnings look ahead – Supergroup, Sainsbury’s, Ocado

A look at company earnings next week.

Source: Bloomberg

Supergroup (full-year earnings 3 July)

Supergroup's results were published in a short form on 29 June due to a theft from an employee that raised concerns external parties may have seen the figures in advance of the market. The firm published edited highlights, which showed that revenue rose 27% to £752 million for the full year to 29 April, while underlying pre-tax profit rose 18.4% to £87 million. E-commerce rose 35% while wholesale revenue rose 43%. It looks like Supergroup’s turnaround plan remains on track, as it seems to boost overseas expansion, but underlying gross margins fell 130 basis points to 60.2%.

The shares dip to £14 several times in 2017, but each incident has seen the buyers step in. However, the shares have been capped at £17, so while we are in a rising trend a major step-change will be at hand, in due course. Recent gains have found resistance at £16.32 and £16.63.

Sainsbury’s (Q1 trading statement 4 July)

Sainsbury’s will release an update that covers both Argos and the supermarket division, having split the two in the previous update. Underlying sales volumes, as well as the eternal battle for market share, remain the key focus for Sainsbury’s investors. Argos is increasingly an important driver of growth, so its performance relative to the supermarket arm will bear watching.

It has been a steady upward trend since the Brexit vote for Sainsbury’s, but the rally petered out around 280p in May. So far, the 253p area appears to be holding, with a bigger dip likely to take us back to the post-June rising trend, suggesting a test of support at 240p.

Ocado (half-year results 5 July)

Ocado's latest update will come in the shadow of Amazon's purchase of Whole Foods, and the jitters this has caused in the UK supermarket sector. Ocado has recently signed with a partner that will utilise the firm’s intellectual property, and with activist investors pushing this as an important part of the business some detail may be forthcoming.

The April-May rally ran out of steam at 340p, and since then a lower high at 320p suggests upside momentum is fading. The areas to watch for support are 230p and then 217p. One positive for the current share price would be that the June peak at 340p broke the sequence of lower highs that has prevailed since June 2015. 

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