Carrefour SA and Marks & Spencer Plc are among European retailers that may update investors next week about the prospects for their businesses, shedding light on the outlook for consumer spending.
Clues about the state of the economy might help determine whether the Dow Jones Stoxx 50 Index will hold on to Thursday and Friday's 7 percent rebound from a 3 1/2-year low set Wednesday.
Sales from retailers are important because consumer spending represents two-thirds of the region's economy. Some investors aren't optimistic.
"I don't think it makes much sense to pin much hope on a rip-roaring European consumer recovery," said Michael MacPhee, who helps oversee Euro 22 billion (US$33 billion) at Baillie Gifford & Co. "It hasn't happened so far, and unemployment's reasonably high. What's the reason to be optimistic?"
Consumers became more pessimistic in June, according to a survey by the European Commission released Tuesday, and European manufacturing expanded at a slower-than-expected pace.
Italian consumer confidence unexpectedly fell to a two-year low in June on concern mounting losses and job cuts at Fiat SpA will hamper a recovery. In the UK, retail sales grew at the slowest pace in 18 months in June. Industrial production figures for the UK, France and Germany are due out next week.
Concerns about the strength of an economic recovery have been compounded by a series of accounting scandals in the US, corporate debt downgrades at European companies such as Vivendi Universal SA and Ericsson AB, and muted sales growth.
Perlos Oyj, the world's biggest maker of plastic mobile-phone components, slid 5 percent Friday after forecasting a second-quarter pretax loss as sales stagnate.
"Earnings could fall this year in Europe," said James Sandison, who helps oversee US$880 million as head of European fund management at Edinburgh Fund Managers. "Confidence is very low."
Carrefour, which has risen 13 percent since setting a low this year in May, reports second-quarter sales on Wednesday after the close of Paris trading. Europe's No.1 retailer has said it's on track for profit to rise at least 10 percent this year.
Carrefour shares exchange hands for about 28 times forecast profit compared with about 16 for the average stock in the Stoxx 600 retail index.
"I don't understand why it's so highly rated," said MacPhee, who prefers Delhaize Group, Belgium's biggest retailer, and isn't planning to boost retail holdings. "I don't see where the growth is going to come from now."
Marks & Spencer, which said in May it returned to profit, holds its annual general meeting Wednesday, when it reports first-quarter sales. The UK's biggest clothing retailer was last year's best performer on the UK's benchmark FTSE 100 Index. This year it's gained 5.4 percent.
"We think the outlook for the UK consumer is still okay, but for retailers it's becoming more difficult," said Charles Deptford, who helps manage PD1 billion at Rothschild Asset Management. "Expectations are still probably too high for a number of stocks in the sector."
Safeway Plc, which has dropped 20 percent this year, said in May same-store sales growth slowed to 2 percent in the previous six weeks after renovations helped lift second-half profit. The UK's fourth-largest supermarket chain reports sales on Tuesday.
KarstadtQuelle AG, Germany's biggest department-store operator, holds its annual shareholders meeting Thursday. The company, which has slumped 44 percent this year, said in May it may cut its 2003 profit target after the weak domestic market hurt business.
Pernod Ricard SA, the third-largest liquor company, and alcoholic cider maker HP Bulmer Holdings Plc also report sales next week.
L'Oreal SA, the world's largest cosmetics maker, publishes first-half sales on Thursday. Its shares have slipped 1.3 percent this year.
To many, Tatu City on the outskirts of Nairobi looks like a success. The first city entirely built by a private company to be operational in east Africa, with about 25,000 people living and working there, it accounts for about two-thirds of all foreign investment in Kenya. Its low-tax status has attracted more than 100 businesses including Heineken, coffee brand Dormans, and the biggest call-center and cold-chain transport firms in the region. However, to some local politicians, Tatu City has looked more like a target for extortion. A parade of governors have demanded land worth millions of dollars in exchange
An Indonesian animated movie is smashing regional box office records and could be set for wider success as it prepares to open beyond the Southeast Asian archipelago’s silver screens. Jumbo — a film based on the adventures of main character, Don, a large orphaned Indonesian boy facing bullying at school — last month became the highest-grossing Southeast Asian animated film, raking in more than US$8 million. Released at the end of March to coincide with the Eid holidays after the Islamic fasting month of Ramadan, the movie has hit 8 million ticket sales, the third-highest in Indonesian cinema history, Film
BIG BUCKS: Chairman Wei is expected to receive NT$34.12 million on a proposed NT$5 cash dividend plan, while the National Development Fund would get NT$8.27 billion Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday announced that its board of directors approved US$15.25 billion in capital appropriations for long-term expansion to meet growing demand. The funds are to be used for installing advanced technology and packaging capacity, expanding mature and specialty technology, and constructing fabs with facility systems, TSMC said in a statement. The board also approved a proposal to distribute a NT$5 cash dividend per share, based on first-quarter earnings per share of NT$13.94, it said. That surpasses the NT$4.50 dividend for the fourth quarter of last year. TSMC has said that while it is eager
‘IMMENSE SWAY’: The top 50 companies, based on market cap, shape everything from technology to consumer trends, advisory firm Visual Capitalist said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) was ranked the 10th-most valuable company globally this year, market information advisory firm Visual Capitalist said. TSMC sat on a market cap of about US$915 billion as of Monday last week, making it the 10th-most valuable company in the world and No. 1 in Asia, the publisher said in its “50 Most Valuable Companies in the World” list. Visual Capitalist described TSMC as the world’s largest dedicated semiconductor foundry operator that rolls out chips for major tech names such as US consumer electronics brand Apple Inc, and artificial intelligence (AI) chip designers Nvidia Corp and Advanced
RSS