Now the Christmas holidays are out of the way and the New Year has almost begun, the focus will switch back to the gifts that keep giving – the state of the UK high street, and the health of the US economy.
In a preview of the update, Russ Mould, investment director at AJ Bell noted that Next was a stunning performer in 2019, as its shares rose by more than two-thirds to top the £70 mark for the first time in four years, showing “that retailers with the right product at the right price point can thrive, especially if they have a strong multi-channel offering, via physical stores, click and collect and online.”
Next shareholders have also received a 110p-a-share full-year dividend and the proceeds of an ongoing share buyback programme.
The clothing and homewares stores group raised earnings estimates more than once in 2019, with consensus forecasts for the year to January 2020 now for total group sales of £4.3bn versus £4.2 billion a year ago and pre-tax profit of £733mln versus £723mln a year earlier.
Mould noted that more than half of Next’s sales in the year to January 2019 were generated online and analysts will look at the differing growth rates across physical stores and the directory business.
US data the other focus
With the US Federal Reserve appearing to have put interest rate policy on hold following its December meeting after three cuts to take rates down to 1.75% in 2019 some US data will provide pointers for the central bank’s 2020 plans, as will the release of minutes from that Fed meeting, due on Friday January 3.
The main focus will likely be on manufacturing data, with both the US ISM and PMI readings also scheduled for that Friday, although ahead of them US durable goods orders and consumer confidence figures will give a snapshot of what is going on across the pond.
On the UK data front, PMI readings for manufacturing will be released on Thursday, and the construction reading will come on Friday.
Significant announcements expected for week ending 3 January:
Monday December 30:
Economic data: Nationwide UK house price index; US pending home sales; Chicago Fed PMI
Tuesday December 31:
New Year’s Eve, London markets close at 12.30pm
Economic data: US consumer confidence
Wednesday January 1:
New Year’s Day, markets closed
Thursday January 2:
Economic data: UK manufacturing PMI; US weekly jobless claims
Friday January 3:
FOMC meeting minutes
Economic data: UK construction PMI; US ISM manufacturing; US manufacturing PMI