Debenhams set to post flat profits

Brokers at Numis predict that the retailer, which has 248 stores in 28 countries, will post largely unchanged pre-tax profits of £83.5 million as it sold more lower margin trading categories such as beauty items.

In the 19 weeks to January 10, the firm's same store trading fell 0.8% due to warm autumn weather which impacted clothing sales.

After a poor Christmas in 2013 resulted in a profits warning, Debenhams has attempted to cut back its discounting and fill its under-used space with concessions such as Sports Direct and Costa coffee outlets.

Over the key Christmas period, it lifted like-for-like sales by 4.9% in the four weeks to January 10 after it boosted online trading by almost a third and held ten fewer days of sales.

It reported record group sales in the seven days prior to Christmas and a good performance on Black Friday when an existing promotional event helped sales rise 10.3% over the week. Online orders on the day jumped 125%.

The performance is in contrast to the previous year's Christmas, when it was forced to issue a profits warning due to poor sales and a botched promotional strategy.

The company has since overhauled its pricing and online offer, resulting in a 12.1% increase in the number of own bought products sold at full prices.

Chief executive Michael Sharp said around 10% of the firm's floor space is under-performing, and the company has brought in major concessions to help lift sales over the last year.

It is currently testing Costa coffee outlets in around 10 stores, Sports Direct in four, Mothercare in three and Monsoon in two stores. It said it will decide on a wider roll-out of these concessions in the next few months.

Magazines and books retailer WH Smith is expected to show further progress on its joint strategy of expanding its travel business and cost cutting at its high street stores when it posts its interim results on Thursday.

Broker RBC Capital Markets also expects the Easter holidays to have buoyed current trading with a record 800,000 passengers passing through Heathrow Airport over the break, building on a 2% lift in like-for-like sales for the first 20 weeks of the year at its more than 700 UK travel shops.

The analyst also said Gatwick enjoyed an 11% boost in passenger numbers, which is accompanied by a recent rise in travellers at regional airports.

It adds that the retailer, run by chief executive Stephen Clarke, has the potential to make further savings at its more than 600 UK high street shops.

Brokers at Numis expect these changes to boost half-year profits by 4.3% to £72 million.

Like-for-like sales in both parts of the group have been consistently negative since 2005 but the retailer's policy of focusing instead on margins is admired by City analysts.

It opened 30 new travel units in the UK during the year and a further 30 sites were opened overseas in the period.

Mr Clarke said: ''Our focus will remain on profitable growth, cash generation and investing in new opportunities that position us well for the future.''

It also said at the time it was planning a small number of greeting cards stores branded Cardmarket.

WH Smith said the stores will provide customers with a value based proposition in a growing part of the market. The trial will be in relatively low rent, short term leases in non prime pitch locations.

Numis analyst Mathew Taylor said: "We expect the interim results to confirm that the business is on track for consensus full-year forecasts."

The City expects the retailer to boost annual pre-tax profits by 6.2% to £118.9 million.

Baby goods retailer Mothercare will want to show that it is achieving more full price sales and revamping its UK stores when it posts an update on trading on Thursday.

Brokers at Numis expect current trading at the retailer, which owns the Early Learning Centre (ELC), to benefit from cost cutting, store and product improvements and less pressure from a strong pound.

This comes on top of its third quarter trading which showed UK like-for-like sales rising 1.1% in the 13 weeks to January 10 as it limited promotional activity and delayed its end of season sale by two weeks until Boxing Day.

Chief executive Mark Newton-Jones said the figures represented progress in the company's push to re-establish Mothercare as a full-price retailer.

The improvement follows a £100 million fundraising last October from shareholders to fund the modernisation and digital overhaul of the UK business.

Last year, Mothercare was squeezed by the ''highly promotional'' efforts of rivals and from lower footfall as it reported UK sales fell 9.9%.

The new chief executive's turnaround plan includes more store closures as Mothercare looks for a core UK estate of 110 out-of-town shops and 50 in-town sites. Closures will be offset by the opening of approximately 15-20 new stores or by relocations to larger, better located premises.

In the UK there are around 200 Mothercare and ELC stores, while worldwide there are nearly 1,500 Mothercare and ELC stores in approximately 60 countries.

A refit programme is under way to reverse under-investment which has meant 80% of the group's UK store portfolio has not been refurbished in the last seven to eight years.

The new look introduces digital screens and video walls, iPads, customer Wi-Fi and click and collect enhancements.

Numis said: "There are clear signs of a more pragmatic retailing approach, and the group remains focussed on completing the store rationalisation process, the store refit and infrastructure modernisation programmes.

"This should significantly reduce the UK operating loss over the next few years, allowing investors to focus on the successful international business."