Leading UK retailer of toddler and kids' clothing, Mothercare, said on Thursday it fell £1 million into the red last year compared to a £4.7m profit in 2000 as warehouse problems took its toll on earnings.

The company said sales climbed 1.2 per cent to £375m and its pre-tax profits fell to £4.2m from £10.2 as it was saved by its overseas unit which made £4m. But it warned that underlying sales have slipped 2.1 per cent in the first two months of the current fiscal year.