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* M&S clothing sales hit in run-up to Brexit vote
* Sports Direct faces higher costs after failing to hedge
* Further company downgrades seen as likely
By Kate Holton
LONDON, July 7 (Reuters) - Signs mounted on Thursday thatBrexit-induced uncertainty and a sharp fall in sterling wouldhurt a wide range of companies and make it hard for them to meettheir full-year profit targets.
With the country convulsed by its worst political crisis inmodern times after Britons voted to leave the European Union,investors have warned the economy could tip into recession,hammering consumer confidence and threatening corporateforecasts.
Britain's biggest clothing retailer Marks & Spencer reported its worst quarterly clothes sales fall for a decade asconsumers shunned spending in the run-up to the June 23 vote,but said it was too early to judge the longer-term implications.
It reiterated its full-year outlook, but analysts at Liberumcut their pretax profit forecast by 4.6 percent.
For Sports Direct the costs are likely to be highand immediate after the retailer failed to hedge againstcurrency moves, meaning its import costs will rise. It said itcould no longer predict its full-year outlook.
And Irish cider maker C&C Group, which earns almost50 percent of its profits in sterling before converting intoeuros, said the currency move had the potential to wipe out anyearnings gains it expected from improved trading and cost cuts.
"We're operating in uncertain times. Consumer confidenceweakened in the run-up to the EU referendum and remainsfragile," M&S Chief Executive Steve Rowe told reporters.
Britain's shock vote to leave the EU has stunned financialmarkets, with the pound bearing the brunt of the early violentreaction, tumbling to a 31-year low against the dollar.
The first economic data that will show the impact of Brexitis due later this month, when the Confederation of BritishIndustry publishes industrial orders and retail sales for July.
Germany's DIHK Chambers of Industry and Commerce said itexpected German exports to Britain to drop by 5 percent in 2017due to the weaker pound and expected economic slowdown.
ABSOLUTE PUMMELLING
Sports Direct, which had already endured a difficult tradingyear due to bad publicity over the way it treats its workers,said it saw little room to pass on any cost rises to customers.
"There's not going to be much appetite for inflation from aconsumer perspective, so how much of it then gets mitigated isthe key," Chief Executive Dave Forsey told Reuters.
Dell, the world's third largest PC supplier behind Lenovoand HP, said it would increase some prices on products sold tobusinesses in Britain.
Manoj Ladwa, head of trading at broker TJM Partners, said heexpected to see further company downgrades as politicians beginthe long process of renegotiating Britain's relationship withthe 28-member bloc.
"Companies that suffer from a weak pound are taking anabsolute pummelling," he said.
"For consumer and retailer stocks, it's not good. Marginsare already being squeezed, and they'll be squeezed evenfurther, especially if we see disposable incomes start to dropas well."
One of the first signs of strain came within the commercialproperty sector, where many investors tried to pull money out offunds, forcing the suspension of trading and leaving 18 billionpounds of investor cash frozen in the system.
Great Portland Estates, a central London propertyand investment company, said it expected the Brexit vote to hiteconomic growth and confidence in the British capital.
"In the near-term, we expect confidence to reduce and somebusiness investment decisions to be deferred whilst negotiationsto establish our trading arrangements with the EU areundertaken," it said.
Stocks in commercial and residential property have been hithard by the vote to leave the EU.
While the FTSE 100 Index has recovered from its postreferendum fall, the smaller FTSE 250 Index, which ismore in line with the British economy than the multi-nationalheavy 100 Index, is still down 8 percent since the vote. (Additional reporting by Alistair Smout, Paul Sandle, SarahYoung and James Davey; Editing by Mark Trevelyan)
