The multinational finances services company also cut its earnings forecasts on the country by an average seven per cent amid global growth fears.
The retail outlook continues to be uncertain as consumers are having to cope with rising costs, falling disposable income and the prospect of increased unemployment.
Last month, uBS and Citigroup lowered their forecast for global growth, with sharp reductions to its euro zone view.
Citigroup said in a note to clients yesterday: “Following the downgrades to uK and European economic growth forecasts, we rebase our pan-European household cashflow forecasts driving a change in our uK general retail relative stance to ‘neutral’.”
The brokerage also reduced its household available cashflow forecast in the uK by 200 basis points citing lower growth expectations and employment forecasts for 2012.
“On the back of our HAC analysis, we reduce our UK EBit growth about 400 basis points, driving a year-on-year UK EBit decline of seven percent in 2011, while a three per cent rise in 2012,” Citigroup said.
Retail sales in August fell 0.6 percent on a like-for-like basis as cash-strapped consumers bought fewer non-essential items such as
homeware or furniture.
The brokerage, however, maintained its “neutral” stance on the euro general retail sector and preferred Inditex over H&M and Statoil.