For the 26-week period to 23 September 2023, international retail sales by franchise partners decreased 15% (13% down at constant currency) to £137.2 million as opposed to £162.1 million last year.
Clive Whiley, chairman of Mothercare Plc, noted the sales were impacted by the continuing global economic uncertainty, alongside the need for franchise partners to clear old inventory.
He continued: “Performance in our Middle Eastern region, especially the Kingdom of Saudi Arabia, remains challenging having undergone significant changes in recent years. Fiscal and legislative changes and the introduction of many new leisure activities competing for consumers’ money is changing consumer behaviour. The shape of our partner’s retail offering in the country is evolving and we remain confident of the longer-term market opportunity.”
However, the online retail sales for the period increased to 10% of total retail sales versus the same period last year.
Adjusted EBITDA increased by 12% to £3.6m from last year’s £3.2m, which the group says reflects tighter control of costs.
While, the profit for the period rose from £0.4m to £1.7m this year.
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The group also had net debt of £15.8m on 23 September 2023.
Whiley added that Mothercare is “acutely” aware of the ongoing pressure exerted on its franchise partners’ profitability and the consequent need for them to reduce costs and the levels of investment they can make in their businesses.
He pointed out this will likely lead to further reductions in the group’s store footprint in some regions.
Mothercare shared plans to redouble efforts to capitalise upon the possibilities to grow the future global presence of the brand. This includes entering new territories through multiple channels or a combination thereof via e-commerce (either DTC or marketplaces) or with partners that would hold the online rights for a territory and provide the website and full supply chain capability in these markets.
This, the group believes, will also open a window of opportunity for Mothercare, via step-change growth, to bring synergies and enhanced profitability into its business, as it exploits the core strengths of the Group across supply, franchisee partnerships and international reach.