Broker snap: Peel Hunt remains a seller of Mothercare

17th Nov 2011 11:59

Following its disappointing first half results, shares in Mothercare sank over 10% on Thursday morning, with Peel Hunt not helping much as it reiterated its sell rating on the stock.The Watford-based babycare retailer recorded a loss before tax of £81.4m in the first half compared with a pre-tax profit of £0.3m last year. It also announced a structural and operational review of its planned UK business size and shape. "Mothercare is already in the process of closing around one third of its UK estate. We see no quick option to downsize the remaining space cheaply, while pricing needs permanent investment in our view," said analyst John Stevenson."We believe the outcome for 2012E... may deteriorate due to a rebasing of prices and the new strategy 'kitchen sinking' in the first half of 2012 calendar year," he said.With the potential for UK losses to widen further, Peel Hunt remains a seller with a target price of 150p.By 11:45, shares were down 10.65% at 138.5p.BC