Analysts cut Forzani outlook as sales disappoint

TORONTO (Reuters) - Analysts slashed the stock price target of Forzani Group (FGL.TO: Quote) and lowered its earnings-per-share estimates on Tuesday following disappointing same-store sales and amid worries over a slowing retail outlook.

The Canadian sporting goods retailer, which boasts Sport Chek as its flagship chain, said on Monday that corporate same-store sales were down 2 percent during the key seven-week period versus the prior year with sales flat in Western Canada, while sales in the east, particularly Ontario, slipped 3.2 percent.

Franchise store sales, predominantly in Quebec, increased 3.5 percent for the seven-week period. Soft-goods sales were better than hardgoods and footwear.

This period is traditionally one of the strongest sales periods for a retailer and a gauge of the sentiment of shoppers going forward.

"Same-store sales for the seven-week period were relatively flat as the positive impact of a strong Labor Day and Back-to-School sales were offset by unfavorable consumer spending patterns," Raymond James Ltd analyst Andy Nasr wrote in a note to investors.

The analyst dropped the company's stock price target 25 percent to C$15 a share from C$20. Nasr also lowered his 2009 earnings-per-share target to C$1.18 from C$1.28, and his 2010 figure to C$1.42 from C$1.59, citing macroeconomic headwinds and lower-than-anticipated same-store sales.

The shares last traded at C$10.25 on the Toronto Stock Exchange on Monday prior to the company's sales report that was released after the market closed.

BMO Capital Markets analyst Adam Clark also lowered his share price target to C$11.50 from C$15.00, while maintaining an "market perform" rating. Genuity Capital Market's analyst cut its target 13.6 percent to C$17.50 a share.

"We are not compelled to move to an 'outperform' rating at this point given the increased potential for EPS risk from macro headwinds and general market turbulence as it sorts out the credit crisis," Clark wrote in a research note.