Seymour Pierce has slashed its full-year profit forecast for Alexon – owner of fashion businesses including Ann Harvey, Kaliko and Eastex – from break-even to a loss of £5m.

The broker, advising sell, is worried by continued tough trading, the length of time a turnaround will take, too broad a business spread and overvaluation of its shares.

Analyst Kate Heseltine said: “The majority of spring was spent clearing old stock and reducing inflexible lead times. The primary objective and biggest hurdle now is to revive the brands which are, as yet, not clearly differentiated and face intensifying competition.”

Trading on 32.1 times forecast 2011 earnings, Alexon is “significantly overvalued” said Heseltine. “We are not forecasting any dividend over the next two years. While the path to recovery remains uncertain and net debt continues to increase we remain pessimistic.”