Kathmandu shares have been downgraded on the expectations of wobbly Christmas trading, which could hurt the bottom line of the sports and leisure retailer.
After telling the market on Monday it might be in for a ''substantial'' profit downgrade because of weak Christmas trading in Australia, Kathmandu shares plunged 20%.
Yesterday they were down a further 2c at $2.18, or 45% down on the year-high of $4 in April.
Craigs Investment partners broker Peter McIntyre said Kathmandu's trading update highlighted a significant deterioration in Australia, with trading unlikely to improve soon.
''Sales and gross profit margin weakness in this key selling period point to very difficult conditions, with customers unresponsive to promotional activity,'' he said.
Forsyth Barr broker Andrew Rooney said the update reflected issues ''more cyclical than structural'', noting trading elsewhere was more positive, but conceded earnings volatility made forecasting difficult.
''Nonetheless, the 20% sell-off in the shares yesterday creates an attractive entry opportunity,'' he said.
Mr McIntyre downgraded the stock to ''hold'' and its target share price down to $2.50.
''Given the weak consumer sentiment and poor start to Christmas trading, a near-term earnings recovery is unlikely,'' he said.
Mr Rooney left his recommendation as ''outperform'', with the share target price revised up from $3.30 to $3.70.
