(Corrects to clarify analyst statement in third paragraph refers to sales outside Germany, not group sales)
* 2010 sales down 5.9 pct at 3.45 bln euros
* Fall bigger than expected; shares drop in early trade
* German sales down 6.3 percent on fewer discount campaigns
* Ops outside Germany hit by Romania, Greece austerity moves
* Q4 sales 749 million euros, down 6.2 percent
(Adds share price, analyst comment)
By Maria Sheahan
FRANKFURT, Jan 6 Austerity measures in Greek and Romanian markets contributed to a bigger than expected fall in sales for German home improvement retailer Praktiker (PRAG.DE) in 2010.
Tax hikes and wage cuts in the two countries have "resulted in a restriction of the disposable income and thus also in the demand for home improvement and DIY products compensating, as a consequence, the sometimes very positive sales trend in the Ukraine, Turkey and Poland," Praktiker said in a statement.
DZ Bank analyst Herbert Sturm noted that Greece, Romania, Bulgaria and Hungary together contribute between 50 percent and 60 percent of sales outside Germany.
"Here there are no signs for a quick turn-around," said Sturm, who has a "strong sell" rating on Praktiker's shares.
The government of Greece, where Praktiker has 12 stores, expects the economy to contract by about 4.2 percent in 2010. Analysts expect that austerity measures will continue to hurt consumer spending in the coming months. [ID:nLDE6BT0I0]
Praktiker stock fell in early trade but by 0855 GMT had recovered worst losses to stand 0.9 percent lower at 7.37 euros , while Germany's midcap index .MDAXI gained 0.33 percent.
The company, which has around 440 DIY stores in 10 countries, in October toned down its outlook for 2010 after its businesses in Greece and Romania failed to turn around.
Pratiker said at the time it expected 2010 sales to decrease by a medium single-digit percentage.
Sales slipped by 5.9 percent to 3.45 billion euros ($4.53 billion) in 2010, declining faster than the 4.2 percent rate expected by analysts, according to Thomson Reuters I/B/E/S estimates.
In its German home market, sales fell 6.3 percent as the company advertised fewer discount campaigns in a bid to improve profitability.
Praktiker is one of the first European retailers this year to update on recent trading, with statements expected next week from companies including Metro AG (MEOG.DE), Carrefour SA (CARR.PA), Tesco (TSCO.L) and Marks & Spencer (MKS.L).
Praktiker trades at 16.1 times estimated 12-month forward earnings, compared with an average of 17.5 times for other European specialty retailers, according to smart estimates from Thomson Reuters StarMine.
(Reporting by Maria Sheahan; Editing by Andrew Callus)
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