2014 has been a tough year so far for Mothercare

2014 has been a tough year so far for Mothercare

In what comes as another blow for UK clothing retailer Mothercare, chief executive Simon Calver stepped down today (24 February) in a move analysts view as inevitable given the group's recent struggles.

The maternity and baby goods retailer retailer has been faced with uncertainty for more than three years, with its UK business struggling to keep afloat.

In May 2011, Mothercare revealed it would shut 110 of its domestic stores to reduce exposure to the challenging high street environment. And it's fair to say its UK operations have weighed on the company's overall performance ever since.

Five months later, the retailer announced a structural and operational review of its UK business after sliding to a first half underlying loss of GBP4.4m (US$6.9m).

Shortly after being hired in April 2012, Calver laid out plans to turn around the business. With signs of improvement in its beleaguered UK operations, it appeared the company was turning a corner.

However, less than a year later, doubts were raised over the future viability of Mothercare's UK unit after the infant goods retailer reported further sales declines in its third quarter.

There was a glimmer of hope in November last year as the company swung to its first half-year underlying profit since 2010/11.

But, Investec analyst Kate Calvert tells just-style: "It was only a matter of time given lack of progress with the UK turnaround strategy and its massive profit warning in January when consensus forecasts were halved."

And Verdict analyst Patrick O'Brien adds: "The departure was inevitable coming after the poor results Mothercare suffered at the end of last year."

"He [Calver] was brought in as an online expert to drive Mothercare's desperate need for a modern, integrated multichannel strategy, but with online sales actually falling 1%, it was clear that progress was not as envisaged."

Calver's appointment, he notes, was a "bold" move. Although successful at Lovefilm and presided over its acquisition by Amazon, "he did not have experience of a physical retailer, and the challenges of building a multichannel strategy". 

Matt Piner, analyst at Conlumino, describes the resignation as "another blow" for what looks an increasingly unstable business.
 
"Indeed 2014 has been a really rough year so far including a profit warning, a plummeting in share price and rumours of a break-up of the business, with Early Learning Centre sold off."

With Calver's digital background, Piner believes he was seen as a "fairly radical appointment". And having ultimately failed to stabilise the business over the last two years, however, it seems Mothercare decided another extreme step was required.

"However, Calver's replacement will be taking on a mammoth task."