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Retailers across Europe fall on Monday, led lower by Debenhams, asthe highly rated stock drops sharply after issuing a profit warning forfirst-half trading, and with the sector subject to a downgrade from UBS.
Debenhams, Britain's second biggest department store group, falls11.3 percent after saying that trading in January was "severely disrupted" bythe snow which fell across the country, hitting first-half profit.
Debenhams had been among analysts most favoured retail stocks, with just oneout of nineteen analysts having a 'sell' rating on the stock prior to theannouncement, Thomson Reuters Starmine data shows.
The announcment from Debenhams, which prompted European retailers tounderperform the broader market, comes after German retailer Metro on Friday reported a drop in profit and cut its divdend, as economicwoes in Europe led shoppers to spend less at its stores.
"Although no retailer has described 2012 as an easy year, from a share priceperspective 'less bad' was good enough to see significant sector outperformance.While a little of that outperformance has faded into the new year market rally,it is now possible that for 2013 'less good' will now be bad news," UBS says ina note.
Retailers rose 8.9 percent in 2012 and UBS turns more cautious on Europeangeneral retailers cutting its recemmendation to to 'neutral' from 'overweight',as it sees the sector "running out of steam".
Among individual companies reduces both Next and Home Retail to"neutral" from "buy", while Citigroup cuts its price target on Metro.
Next loses 3.3 percent, near the top of the FTSE 100 fallerslist, FTSE 250 Homebase-owner Home Retail sheds 4.8 percent, while Metro is down5 percent.
Reuters messaging rm://alistair.smout.thomsonreuters.com@reuters.net
Reuters messaging rm://david.brett.thomsonreuters.com@reuters.net
