MARKET COMMENT
The Week Ahead: M&S, BA and BT

By David Kuo (TMFDragon)
November 2, 2001

Carburton Street, London -- Marks & Spencer (LSE: MKS) will unveil its first half story on Tuesday and the market will be keen to get an update on the company's much-heralded Per Una womenswear range from George Davis. Investors will also want to hear if the recent warm weather that has adversely affected a number of other high street retailers has impinged on M&S's performance in the same way. M&S recently completed a £348m sale and leaseback deal on 78 of its high street stores. The proceeds of this deal will be used to partially finance the return of £2b to shareholders.

British Airways (LSE: BAY) taxis onto the runway with second quarter numbers on Tuesday. The brokers at Lehman Brothers have been very bearish on the company and commented the market has underestimated the short-term impact of BA's impact to premium traffic and North Atlantic routes. BA is not expected to buck the downturn in the airline market and, whilst a loss of £30m is expected, investors will be keen to see hear how the cost cutting measures will feed through into future performance. Separately the trade unions that represent over 90% of BA's staff have already agreed to defer bonus payments and the airline has also asked its middle managers to accept a 5% pay cut.

The UK's fourth biggest drug maker Shire Pharmaceuticals (LSE: SHP) reports third quarter numbers on Wednesday and the market should get some early indications of its recently launched once-a-day medication for Attention Deficit Hyperactivity Disorder. It recently signed a £300m flu vaccine deal with the Canadian government. Under the agreement Shire will need to supply 32 million vaccine doses for the entire Canadian population within 16 weeks if called upon.

Is the economy contracting or is it expanding? The Bank of England's Monetary Policy Committee (MPC) will need to decide when they sit down for their regular pow wow on Wednesday. The industrial and manufacturing production numbers due out on Monday is likely to show a continuing slowdown in manufacturing and the housing market is also starting to show signs of fatigue. The MPC will deliver their decision on interest rates on Thursday at noon.

Boots (LSE: BOOT) caused a stir when it decided to switch its £2.3b pension fund into triple A-rated corporate bonds. The move away from equities and into fixed interest investments may have been a response to recent changes in accounting standards, which requires companies to account for liabilities in their pension funds. But there are unlikely to be any surprises when Boots delivers first half results on Thursday. In September, the high street chemist said its cost reduction programme was on track to deliver savings and growth in its health and beauty sales was offset by weak sales in its baby and photographic divisions.

British Telecom (LSE: BT.A) has second quarter numbers on Thursday. This will be the last time that the company will report as a combined fixed line and mobile telecom company. From November 19, the mobile business will operate as a separately listed company known as mmO2 and the fixed line operations, which also includes the company's Internet business, will be known as BT Group.

There are also numbers from the oil giant BP (LSE: BP.), the convenience food business Uniq (LSE: UNIQ), London Stock Exchange (LSE: LSE), the electricity generator British Energy (LSE: BGY), Carphone Warehouse (LSE: CPW), the train and bus operator FirstGroup (LSE: FGP) and the discount retailer Peacock Group (LSE: PEA).