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A first-quarter trading update has sparked Andrew Saunders, analyst at Panmure Gordon, to reiterate his sell advice on Uniq, while also slashing his share price target by 20%.

Uniq confirmed that sales had grown by only 0.8%, well below Saunders’ target of 2.9% for the year as a whole, while a 1.3% decline in the UK and France was well down on the analyst’s hopes.

Saunders points out that while sales in the UK should perk up in the second half, partly aided by additional business with Marks & Spencer, Uniq’s admittance to suffering a ‘lag in in inflation recovery’ remains a worry.

The company announced that it would close the Paignton factory to concentrate production at Minsterley and Evercreech. Although this should lead to savings of £11 million a year the broker is sceptical as ‘such site closures have often been problematic, with integration issues, disruption and loss of efficiency at the remaining plants’.

Saunders believes ‘there is much still to do’ to transform the group and is forecasting earnings to remain static this year at around 3.5p a share, implying a hefty PE of 33-odd.

by John Marshall