Goldman takes down price targets on UK General Retailers

Combined, those three factors drove an average reduction in their 2017/2018 earnings per share estimates of between 3.0% and 5.0% and a 11% target price reduction for the companies in the sector covered by Goldman's analysts.

The broker also downgraded its recommendation on stock of Kingfisher from 'buy' to 'neutral' (from 435p to 375p) and on Sports Direct from 'neutral' to 'sell' (and the target from 400p to 300p).

Goldman also kept to a 'sell' stance on shares of Associated British Foods, Debenhams, H&M, Marks&Spencer and Next.

Following the UK referendum, UK non-food retail spend would be 100 basis points lower in 2017 while the UK 'equity risk' premium would be 100 basis points higher, the analysts said.

The impact on food retailers was expected to be "less severe", Goldman said in a research note published on Monday but dated 26 June.

"Across our UK Food Retail coverage, we forecast a broadly neutral top-line impact on sales related to the UK referendum," analysts Richard Edwards, Rob Joyce, Abhilash Mohapatra and Natasha de la Grense said.

The more benign outlook for food retail was because the inflationary impact of a weaker sterling on food prices - 25% of UK food comes from Europe - would offset the negative impact on volumes from weaker consumer spend.

The broker cut its target price on several of the UK food retailers under its coverage by approximately 6%, reflecting an increase of about 50 basis points in the discount rate applied to their cash flows.

The analysts said that in an environment of increased uncertainty they preferred exposure to "structural growth" stories, such as Ocado, Booker and Jeronimo Martins).