Citi cuts Maisons du Monde on earnings headwinds, shares down

Maisons du Monde SA

31/05/2022 10:34

** Citi cuts French home decor retailer Maisons du Monde
 MDM.PA  to "neutral" from "buy" citing macro headwinds that
drove the firm to cut its outlook on Friday  urn:newsml:reuters.com:*:nL5N2XJ0JR
    ** "The recent downgrade to its FY22 guidance shows the
negative impact that multiple macro headwinds are having on the
company's earnings trajectory," Citi says, pointing to reduced
consumer confidence, cost inflation and supply chain constraints
    ** The broker flags several risk factors to the stock
reaching its lowered target price of 14 euros (vs 24 euros
previously), including increased competition and competitive
pricing
    ** It warns "cannibalisation" of existing stores could occur
due to store rollout and online growth 
    ** It adds space growth may not result in enhanced
profitability or the rate of expansion may slow in future years
    ** Citi remains positive on MDM's omni-channel approach in
the home furnishing market and brand positioning, but says it
will wait for more clarity on the macro environment
    ** Shares fall around 3% in morning trade to 12.56 euros per
share, bringing their YTD losses to 38%
    ** MDM's shares plunged on Friday to their lowest since
November 2020 following the surprise guidance cut  urn:newsml:reuters.com:*:nL5N2XJ0WD
    ** Out of nine analysts that cover Maisons du Monde, four
rate the stock "strong buy" or "buy", ​four "hold" and one
"sell"

 (Reporting by Augustin Turpin)
 ((augustin.turpin@thomsonreuters.com))