THE first tentative signs that the gloom engulfing the high street may be lifting is expected this week as analysts are predicting a slew of "positive results" from the battered retail sector.
Burberry, Debenhams, Tesco, WH Smith and Primark owner Associated British Foods will all update the City in what will be the first major snapshot of trading on the high street since the turbulent Christmas period.
Analysts are expecting some sprin
g cheer as shoppers, flush with more money from reduced mortgage payments and lower energy bills, have been splashing the cash.
However, optimism may be tempered if fears of the announcement of a VAT increase are realised, as financial experts are warning.
Tesco is expected to lead the good news by unveiling annual profits of £3bn with sales in the last year topping £53bn. Analysts say value fashion retailer Primark is also expected to deliver "excellent results," propping up the weak performance of its parent company, while Debenhams is also confident that it will report higher sales.
Freddie George, retail analyst at Seymour Pierce, said: "There is no doubt about it, figures will be better than expected right across the board. I don't think there will be any gloomy statements.
"The economy is not quite as bad as people make out. Interest rates have come down, which has had a knock-on effect on mortgage costs for individuals. I think it is going to be an absolute bumper summer for retailers."
Tesco will emphasise the strength of its international business, particularly its progress in China and South Korea. The group's services businesses, Tesco Direct and Tesco Personal Finance, have shown strong growth and are likely to make the headlines. Investors will also be looking for reassurance from Tesco that strong growth can continue.
But the optimism may be tempered by WH Smith as analysts expect it to signal further cost savings wile Associated British Foods is expected to have suffered from pressure on its margins. Nick Bubb, retail analyst at Pali International, said: "The overall mood will be very good."
Meanwhile it has emerged that Charles Dunstone, the chief executive of Carphone Warehouse, will use the group's fourth-quarter trading update on Wednesday to announce a demerger of its retail and telecoms interests.
Sources close to the company say that Dunstone will not specify a timetable but a demerger was likely in 2010.
