FESTIVE trading updates from the likes of Tesco and HMV next week will shed further light on how the sector fared, while the HBOS/Lloyds TSB tie-up is also set for court approval.
HBOS and Lloyds TSB are expected to clear the last hurdle towards their tie-up to create the UK’s biggest bank on Monday.
The deal, which is being structured by way of a Scheme of Arrangement, is set to be formally approved in the High Court in Edinburgh.
Following news that the HBOS pension trustees have dropped legal moves to try and delay the bank’s takeover by Lloyds, there is now little to stand in the way of the mega bank merger.
Guardians of the final salary pension scheme had threatened to ask the judge not to ratify the scheme of arrangement until greater protection was offered for the 80,000-strong member fund.
But the trustees backed down in light of the ``potential repercussions" of any delay to the deal or the fundraising planned under the Government’s part-nationalisation scheme.
The £17 billion State-backed fundraising is set to complete on January 15, with the deadline for acceptances of new shares in Lloyds TSB now having passed.
The placing is expected to leave the Government mopping up unwanted shares after appetite for further equity in the banking sector has been decimated by the credit crunch and stock market turmoil, which could leave the taxpayer owning a substantial chunk of the soon to be created Lloyds Banking Group.
The two firms are hoping to complete their merger mid-January, with the new enlarged company to list on the London Stock Exchange on January 19.
It will be one of the sector’s biggest ever deals and the "super bank" that will be created will boast around 145,000 staff and 3,000 branches.
The UK’s biggest supermarket, Tesco, will unveil Christmas trading results on Tuesday with figures under scrutiny after a recent fall-off in sales growth.
The retail giant will be under pressure as rivals show signs of continuing strength.
Sainsbury has said it enjoyed its best-ever festive season, while Asda’s UK trading was strong despite a profits warning from US parent Wal-Mart.
In December, Tesco revealed its weakest UK sales performance since the last recession as like-for-like sales growth slowed to 2% in the 13 weeks to November 22, down from 4% the previous quarter.
This came after a supermarket price war and the launch a new range of discount brands to compete with cheaper rivals such as Aldi and Lidl.
But figures released by market research firm Nielsen this week suggest sales growth of 4.6% in the four weeks to December 27 - ahead of the market and nearly as good as Asda’s 5.1%.
Pali International’s Nick Bubb - who raised his target price on Tesco this week - said: ``It looks as if their focus on "Discounter`` brands may be starting to work and we expect the market will like what Tesco have to say when it reports on Xmas."
Analysts will also examine Tesco’s non-food sales, which fell slightly in the UK on a like-for-like basis - another factor behind the quarterly decline - although its international business should continue to perform well.
Next week brings another clutch of trading updates from high street retailers, with music and games retailer HMV, Argos owner Home Retail Group and car parts and bicycles firm Halfords all reporting on Thursday.
HMV’s stronger emphasis on higher-margin games and store revamps have already brought about something of a recovery from its struggles with internet and supermarket competition in recent years.
Although the collapse of rivals such as Woolworths and Zavvi will help in the long-term, its Waterstone’s book chain suffered from poor non-fiction demand as celebrity hard-backs failed to inspire shoppers. It also faces tough comparisons with last year.
``We do not expect sparkling numbers from HMV, but clearly it stands to benefit from the demise of competitors," Panmure Gordon’s Philip Dorgan said.
Home Retail Group, which owns Argos and Homebase is another likely to report poor trading news. The group wrote off more than £500 million from the value of the struggling DIY chain and warned of the impact of recent financial turmoil on profits.
Home said like-for-like sales had fallen by ``high single-digits" since August - a trend which would leave profits at the bottom end of expectations if continued in November and December, chief executive Terry Duddy warned.
Meanwhile Halfords has proved a relatively defensive stock so far as motorists put spending on their cars ahead of other discretionary purchases.
But analysts fear its figures could pay the price of a fall-off in sales of more expensive car accessories.
Seymour Pierce’s Freddie George said: ``We believe (the update) will be worse than expected because of a drop off in sales of low margin satellite navigation devices widely reported.
"We now expect sales to be down by 3% including a like-for-like decline of 6%."
Fox’s biscuit firm Northern Foods and Hovis bread maker Premier Foods will also deliver their verdict on Christmas trading on Tuesday.
Coming up on nebusiness next week online and in print:
On Monday we talk to Durham Tees Valley Airport boss Kerry Quinn about the site's exciting future.
In Wednesday's Commercial Property supplement, which is also available on nebusiness.co.uk, movers and shakers from across the region look ahead to what promises to be a challenging year.
On Thursday, our weekly Science and Technology magazine - also online at nebusiness.co.uk/technology - brings you the latest news from the North East's emerging hi-tech industries.
Log on to nebusiness.co.uk throughout the week for regional and national business news as it breaks.
