Broker snap: Weather may not be Mothercare's only problem

6th Jan 2011 13:26

Peel Hunt suggests the reason for Mothercare's weak trading update could be that the group was simply out-competed, rather than purely suffering from weather disruption.The mother and baby goods retailer today reported third quarter pre-tax profit below market expectations because of weak UK life-for-like sales, with the blame placed entirely on bad weather.But the broker says it had retained concerns regarding UK performance in the build-up to the period with its profit forecasts being 5-10% below consensus."We assume consumers chose to shop elsewhere, whether online or at the superstores, regardless of the weather and note Direct to Home appears not to have enjoyed a boost in trading either," says analyst John Stevenson.Profit estimates for 2012 are reduced by 10% and broker keeps the stock as a 'hold', with a target price of 550p.