Wednesday preview: Tesco and Burberry to post fall in earnings

Tesco and Burberry Group will be the centre of attention Wednesday as the FTSE 100 companies unveil their latest trading results.

British supermarket Tesco is expected to report its first fall in underlying annual profits in two decades.

Analysts at Vuma Consensus predict an underlying pre-tax profit of £3.5bn in the year to end of February 2013, a 10.7% decline from the £3.92bn reported the previous year.

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The decline will reflect the cost of restructuring which was launched after the supermarket issued a profit warning in January 2012.

The £1.0bn turnaround plan includes more employees, refurbished stores, revamped food ranges and price initiatives. It aims at reversing years of underinvestment and a loss of market share to rivals like Sainsbury and Wal-Mart's Asda.

Tesco, the world's third largest retailer after Wal-Mart and Carrefour, has also been affected by the Eurozone debt crisis, regulatory difficulties in South Korea and losses at its Fresh & Easy business in the US.

Meanwhile, fashion firm Burberry is expected to show a slump in sales performance when it releases its trading update.

The group last posted a 13% rise in underlying revenues to £464m in the three months to December 31st. However, analysts at Nomura expect Wednesday's update to show the sales performance has slowed since the Christmas season.

They forecast fourth quarter sales growth to drop to 3.0%, with an additional 8.0% contribution from new space.

Wholesale revenues are pegged to decline by 2.0% as a tough European economy hits the luxury designer, according to Nomura.

Nevertheless, the broker said 2013/14 will be a "key year for Burberry", with management changes and its new beauty product division.

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