Broker snap: Mothercare forecasts cut

31st Mar 2011 11:59

Peel Hunt cuts its target price at Mothercare by 22% to 350p, from 450p, saying that it would not look to buy the shares above this price, particularly given that the baby clothes and children's toys retailer is not geared into any eventual consumer recovery.Thursday's interim management statement and guidance represents further evidence of UK consumer weakness, but "it is more a function of Early Learning Centre's (ELC) [its toy chain] position in a highly competitive toy market following the Christmas profit warning," said analyst John Stevenson.UK like-for-like sales were down 2.4% in the fourth quarter and the group also reduced gross margin guidance from -200 basis points (bp) to -250bps for the year, "giving an indication of the scale of markdown required to clear excess stock after Christmas at ELC.The broker downgrades forecasts for the second time in two weeks, and keeps its 'hold' rating.BC