Retailers' results will offer important clue to direction of interest rates; STOCK MARKET WEEK

With growing evidence shop sales are surging and could tempt the newly independent Bank of England to lift interest rates next month, it is, perhaps, fitting that retailers are due to play a big role in this week's results programme.

May's retail sales recorded a sharp gain. And that was before Halifax and Norwich Union loot became available. With Woolwich due next month and the conversion bandwagon gathering strength all the signs of a relentless spending spree are erupting.

Asda, Great Universal Stores and Harvey Nichols make up the retail contingent.

The superstores chain, producing year's figures on Thursday, is finding itself increasingly under the stock market microscope with a number of analysts extremely cautious.Under Archie Norman, Asda staged a dramatic revival. When he arrived the group was past its sell-by date and seemed destined to fall victim to a rescue takeover bid at a knock-down price.

The shares bumped along at 22p in 1993; a few weeks ago they touched 129p.

The Norman conquest was a remarkable achievement. He transformed the business from the favourite target of stand-up comedians to a highly sophisticated retailing operation challenging the might of Tesco.

But nowadays Mr Norman is a Tory MP, devoting just two days a week to Asda.

There is no doubt the group has a first-class management team and on a day-to-day basis the Norman presence will not be missed. There are, however, worries the inspirational touch, so essential to a big retail player, will no longer be as sharp and Paul Smiddy, analyst at Credit Lyonnais Laing, declared last month: "There is a tone of desperation to some of Asda's trading moves of late."

The market has been ruffled by its short-lived pursuit of the Welcome Break motorway services stations. Its now-ended interest in the up-for- sale Littlewoods stores was regarded as another worrying development.

Thursday's results will be startling; around pounds 420m against pounds 304.6m. But they will include pounds 80m from the sale of a stake in Allied Carpets. Stripping out the Allied windfall, profits will be some 12 per cent higher at pounds 340m.

Tony MacNeary and Mike Dennis, analysts at NatWest Securities, have taken a negative view of Asda for some time and believe the shares should be sold. They see sales growth slowing, margins squeezed and "Asda delivering only limited shareholder value compared to its major rivals".

Great Universal Stores, once known as "gorgeous Gussies" in the market, is expected to suffer the indignity of a profits fall when it reports on Thursday. A 3 per cent decline to pounds 546m is likely.

Under new chairman Lord Wolfson of Sunningdale, the super-secretive catalogue shopping group, a veritable sleeping giant with a huge cash pile, has had an energetic year. It splashed out pounds 1bn, its first big deal for 30 years, for Experian, one of the biggest business information concerns in the US.

So last year's pounds 1.2bn cash mountain will have been seriously eroded although a subsequent property deal with British Land will repair some of the damage.

Lord Wolfson is clearly intent on steering GUS on a much more adventurous course. Many parts of the jigsaw have yet to be put in place. One possibility the market still ponders is an agreed takeover for Next, the high-street trend-setter.

Shares of Harvey Nichols, which has reaped rich rewards from its Absolutely Fabulous association, have lost much of their glitter as the appeal of the stores sector has diminished. Year's profits today should be around pounds 13m, up from pounds 9.2m.

A Harvey Nicks opened in Leeds in October and the Oxo restaurant in London are regarded as the Hong Kong-controlled group's pace-setters. More store and restaurant openings are planned.

Other groups which could hope to enjoy some of the conversion cash include First Leisure Corporation; brewer Greene King and upmarket house builder, Berkeley.

FLC's half-year results tomorrow will create little excitement; they are likely to be near to last year's pounds 16.4m. But the occasion will give the new chief, Michael Grade, the former head of Channel Four TV, a chance to articulate the group's development plans.

It has given the impression lately of no longer being certain about its direction. FLC has flirted with pubs and some feel, despite recent expenditure, is not truly wedded to bingo - a pastime hit by the National Lottery.

Last month former chief executive John Conlan clinched FLC's biggest deal, the pounds 61m takeover of the Riverside health and fitness business. The flamboyant, cigar-chomping new chief is obviously fully behind the acquisition and it could be that he intends to make FLC an even fitter participant in the booming health club world. FLC's last unsuccessful pub excursion was a bid to take over The Magic Pub Co. It lost to Greene King which splashed out pounds 197.5m.

The East Anglian brewer rolls out year's figures on Wednesday and they will contain the first meaningful contribution from the pubs acquisition. NatWest is looking for a 45 per cent upsurge to pounds 35.7m.

Berkeley, planning to transform the old Harrods depository at Barnes into a luxury residential complex, should have enjoyed an exceedingly good year and projections of pounds 61.5m against pounds 43.3m have been made for Thursday's profits.

Another which should reap rewards from the demutualisation movement is Vendome, the luxury goods group. It should produce year's profits tomorrow little changed at around pounds 260m.

Halma, an environmental engineer, may, at best, collect a tiny slice of the conversion bonanza. Even so its results and accompanying statement deserve careful attention. Around pounds 39.5m against pounds 33.6m is expected. Still, any sort of increase tomorrow will ensure the group's 21st year of uninterrupted profits progress. Quite an achievement.