UK: Mothercare shares plunge on profit warning
Group sales fell 6.1% during the Christmas trading period
Shares in retailer Mothercare slumped by nearly 30% today (8 January) after the company issued a profit warning on depressed Christmas trading.
The UK business said worldwide network sales were down 4.4% in the 12 weeks to 4 January, while group reported sales fell 6.1%.
The company’s international business was affected by currency deflation and weaker than expected economic conditions in key markets, leaving international retail sales up by only 0.4%.
Meanwhile, “highly promotional” conditions in the UK and lower seasonal footfall impacted both sales and margins, despite close management of stock.
Mothercare said it remained “cautious” in its outlook and now expected full-year profit to fall below the current range of market forecasts.
“Difficult UK trading conditions and volatility in some of our international markets resulted in weaker than expected worldwide network sales this quarter,” said Simon Calver, chief executive.
He added that direct revenues had fallen during the quarter, with elc.co.uk sales affected by a weak toy market, coupled with the company’s decision not to repeat its free delivery offer of a year ago.
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