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Sunday, 8 April, 2001, 16:41 GMT 17:41 UK
Wall Street braced for first quarter blues
wall street traders
Wall Street prepares for another gloomy week
US investors are expecting company profits for the first three months of 2001 to be the weakest in a decade.

As companies prepare to release their first quarter figures, financial research company First Call says profits are expected to fall by 8.6%.

The previous worst quarter for earnings was summer 1991, when profits fell 17.9%.

First Call says more than 800 US businesses have warned that sales and profits will miss targets in the three months to 31 March.

And analysts fear that the bad news has already been factored into stock prices, ruling out a market recovery in the near future.

Record gains

Among the big names expected to report a first quarter downturn are Yahoo, which has experienced a slump in advertising revenue, telecoms giant Motorola and Dow Jones, publisher of the Wall Street Journal.

A strong rally on the US markets last week was wiped out on Friday as worse than expected employment figures - and news that California's largest power company was filing for bankruptcy - stoked recession fears.

The benchmark Dow Jones Industrial Average lost 0.8% on the week, to stand 9.2% lower on the year.

The US news also drove down European markets, which had been enjoying a modest recovery.

UK outlook

UK investors will this week be looking to the high street for some good news, with a host of retailers, including Debenhams, Tesco and Great Universal Stores set to report their figures in the coming week.

Supermarket chain Tesco is expected to smash through the 1bn barrier when it reports its full-year profits on Tuesday.

Sales have been boosted by food price inflation and a less aggressive pricing environment in general, while the group is also likely to have increased its share of the non-food market.

Stockbroker Gerrard predicts pre-tax profits of 1.1bn, compared with 955 million last year.

A strong Christmas trading statement has convinced the City that department store chain Debenhams will produce a strong set of interim results on Tuesday.

The group showed sales over the first 20 weeks increased by close to 11% and both a brand awareness advertising campaign and the addition of four new stores should help to bolster this growth.

Analysts predict interim pre-profits of 78.2m, up from 73.8m.

Tech-stock slump

However, the fragility of the UK stock market could be tested once again when chip designer Arm Holdings reports its first quarter results on Wednesday.

Arm has been caught up in the recent tech stock slump and will need to provide a solid outlook statement and evidence that demand for its products and services remains strong despite the slowing US and Japanese economy.

Stockbroker Gerrard forecasts first quarter profits of 11.5m, compared to 8.2m last year.

There are also concerns that fashion brand Burberry's growth could be slowing, particularly in its traditional safe haven of the Far East.

Its parent Great Universal Stores (GUS) will have to allay these fears when it makes a fourth-quarter trading statement on Wednesday.

The City will also be keen to hear if its US business Experian, which accounts for 25% of group profit, has been affected by the US slowdown, particularly after a profit warning from competitor Acxion last week.

Analysts expect a full-year pre-tax profit of 465m against 379.6m last time.

Sports retailer JJB Sports is expected to unveil full-year pre-tax profits of 80.3 million, an increase of near to 10m on last year.

Retailer WH Smith is expected to announce its first-half figures on Tuesday.

View market data
Launch marketwatch
The Markets: 9:29 UK
FTSE 100 5760.40 -151.7
Dow Jones 11380.99 -119.7
Nasdaq 2243.78 -28.9
FTSE delayed by 15 mins, Dow and Nasdaq by 20 mins

Analysis

Economic slowdown

Background

TALKING POINT
See also:

15 Mar 01 | Business
06 Apr 01 | Business
05 Apr 01 | Business
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