Broker snap: Mothercare still a 'sell' despite Q2 beat, says Seymour Pierce

18th Oct 2012 09:59

Seymour Pierce has retained its 'sell' recommendation for baby and mother products retailer Mothercare despite the group's well-received second quarter trading update on Thursday.Overall, Seymour Pierce admits that the trading for the 27 weeks to October 13th has been better than expected in the UK, though Mothercare's performance overseas "remains a little disappointing [...] although in line with our forecasts".In the UK, like-for-like (LFL) sales were "encouraging"and gained 0.3% against easier comparisons to the first quarter.Analyst Freddie George said: "There is likely to be some support to the share price after the better than expected UK LFLs but on the basis of our forecasts, the shares are trading on a very rich FY13 price-to-earnings ratio of 34.9x declining to 14.2x in the following year. "We do not believe Mothercare is an easy fix and brand repositions tend to take longer than expected. It will be difficult to make Mothercare relevant again for the modern mother as it has strong competition from Amazon and the supermarkets."Seymour Pierce has kept its 145p target price.By 10:05, Mothercare was trading 8.71% higher at 252.75p.BC