UK: Mothercare "on track" as H1 losses shrink
- H1 underlying losses before tax narrowed to GBP600,000
- Sales fell 5.9% to GBP388.4m
- Company remains "on track" with transformation plan
The baby and children's goods retailer saw international retail sales rise 10.8% to GBP374.8m
Mother, baby and children's goods retailer Mothercare today (22 November) said it is "on track" with its three-year turnaround plan after its half-year losses narrowed, but said it remains cautious in its outlook.
Group underlying loss before tax narrowed to GBP600,000 (US$957,181) for the 28 weeks to 13 October, compared to a GBP4.4m loss last year. After exceptional items and charges of GBP26.8m, loss before tax reduced to GBP27.4m, against a loss of GBP81.4m the year before.
The retailer, which operates through 1,378 stores around the world, saw group sales fall 5.9% to GBP388.4m, from GBP412.9m in the same quarter last year.
In the UK, retail sales declined 8.6% to GBP240m, compared to GBP262.7m last year, while like-for-like sales slipped 3.4%.
However, international retail sales were up 10.8% to GBP374.8m against GBP338.3m a year ago as like-for-like sales rose 4.4%, despite difficult trading conditions in Europe.
CEO Simon Calver said: "Our results show early signs of progress despite the challenging trading conditions in the UK and the eurozone. International profits have grown by 20%, while the like-for-like sales trend in the UK has improved and losses have reduced."
Chairman Alan Parker CBE added: "We have made good progress over the last six months in implementing the cost and efficiency measures of our three-year transformation and growth plan for Mothercare. These are early days and while there is much still to do, I remain confident that we are on track."
Looking ahead, Mothercare said it expects international retail sales growth in the second half of the year to be similar with the first half as weak Eurozone markets continue to weigh on performance.
Conlumino analyst Joseph Robinson believes the initiatives Mothercare has implemented over the last six months are beginning to bear fruit, but emphasises that challenges lie ahead.
"Mothercare faces a long term challenge to turnaround a proposition which, over the last few years, had failed to adapt to the evolving UK retail landscape. This will have to be achieved against the backdrop of mounting competitive threats, not least in the form of Kiddicare and John Lewis' continued expansion of its At Home format.
"Nonetheless, the retailer will take solace from its upturn in performance, which represents a sound base from which to drive the more customer-focused elements of its restoration plan."
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