A leading investment bank has said that Woolworths, one of the most famous names on the high street, has no future in its present form and has called the stores “worthless”.

In an analyst’s note yesterday that will fuel fears over the retailer’s immediate prospects, Citigroup slashed its price target for the business nearly in half to 12p.

At one stage Woolworths’ shares plunged 9 per cent, or 1½p, to 14½p, the lowest since the group’s flotation six years ago. They recovered to 15p, which valued Woolworths at £221 million.

Bruce Hubbard, Citigroup’s retail analyst, said: “We are far from persuaded that the retail chain can lay claim to any equity value. The past three to four years have seen a widely respected management team generally lose its battle against the competitive forces of a dire retail segment.

“Right now we look to be heading into a nonfood consumer recession. Woolworths is not a chain where we would choose to ride out such a downturn. Put simply, this is not an equity that long-term investors should engage with, given the UK’s current macro-parameters.”

Concern over the group’s health has risen in recent weeks amid fierce supermarket competition on key lines such as confectionery and CDs.

Mr Hubbard said that the main chain of 818 stores was suffering from a loss of scale and poor store locations.

He admitted that the value in 2 entertain - a joint venture between the BBC and EUK, Woolworths’ CD and DVD wholesale unit - was potentially more than £500 million.

However, he said that a bid was highly unlikely given debts of £180 million and a £45 million pension deficit.

The note came a day after Philip Dorgan, an analyst for Panmure Gordon, predicted that Woolworths would be one of four winners in the high street this Christmas.

In October, Trevor Bish-Jones, Woolworths’ chief executive, insisted that there was a “good chance” that the main chain would move back into profit this year, after making a loss in 2006. Woolworths refused to comment on the Citigroup note.

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