* Cuts Kingfisher to 'hold' from 'buy', target price to 290p from 340p
* Trims Next target price to 3,000p from 3,300p
* Slashes Home Retail target price to 70p from 95p
May 21 (Reuters) - U.K. retailers are likely to be hurt by a slowdown in orders from European markets and the difficult trading conditions, said Seymour Pierce as it downgraded the general retail sector to 'underweight'.
Seymour downgraded Europe's biggest home improvements retailer, Kingfisher, to 'hold' from 'buy' citing weaker trading in its core markets, including France, UK, China and Poland.
The brokerage also cut its price target on Britain's second-biggest clothing retailer, Next, to 3,000 pence from 3,300 pence, and on the country's biggest household goods retailer, Home Retail, to 70 pence from 95 pence.
European retailers are struggling as disposable incomes are squeezed by rising prices, muted wages growth and government austerity measures, and shoppers fret over the implications of the euro zone debt crisis.
'Internet sales will continue to cannabalise store-based revenues and lead to a general softening in prices. Gross margins are expected to be flat at best in a competitive market and costs are still rising,' analyst Freddie George wrote in a note to clients.
George slashed his earnings outlook for a number of retailers, including Home Retail and Marks and Spencer Group Plc , to reflect a more difficult UK trading environment.
British designer clothing brand Ted Baker, fashion retailers ASOS and SuperGroup, and mother and baby products retailer Mothercare are among those who are likely to see a negative earnings impact from their exposure to Europe, said the analyst.
The European retail sector index was up 0.01 percent at 234.04 points at 0840 GMT on Monday.
(Reporting by Aditi Sharma in Bangalore; Editing by Maju Samuel) Keywords: UKRETAILERS/RESEARCH SEYMOURPIERCE
(Aditi.Sharma1@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 4135 5800; Reuters Messaging: email@example.com)
COPYRIGHT Copyright Thomson Reuters 2012. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Datafeed and UK data supplied by NETbuilder and Interactive Data.
While London South East do their best to maintain the high quality of the information displayed on this site,
we cannot be held responsible for any loss due to incorrect information found here. All information is provided free of charge, 'as-is', and you use it at your own risk!
The contents of all 'Chat' messages should not be construed as advice and represent the opinions of the authors, not those of London South East Limited, or its affiliates.
London South East does not authorise or approve this content, and reserves the right to remove items at its discretion.