• H1 underlying profit swings to GBP2m 
  • Group sales down 2% to GBP376.3m 
  • Company says "more work to be done"
Mothercare saw double-digit international sales growth during the first half

Mothercare saw double-digit international sales growth during the first half

Turnaround efforts at Mothercare have started to pay off after the UK retailer swung to its first half-year underlying profit since 2010/11.

Helped by double-digit international sales growth and signs of recovery in its domestic business, Mothercare said underlying profit before tax reached GBP2m (US$3.3m) during the 28 weeks to 12 October, compared to a loss of GBP1.8m in the same period of last year.

Group sales were down 2% to GBP376.3m from GBP384.1m in the prior year. Total international sales, however, rose 13% to GBP399.3m, while like-for-like sales increased 4.8%.

In the UK, sales fell 7.5% to GBP238.4m over, and on a like-for-like basis, edged down 1.4% during the period.

Chairman Alan Parker said: "International has continued to see double-digit growth and the UK has seen losses reduced. Our geographic diversification has supported these results amid some challenging trading conditions. The business is moving to a firmer footing."

While CEO Simon Calver added: "The benefits of the changes we are making to the business are clear, with a return to underlying profit. Our international business continues to deliver double-digit growth and the opportunities in these markets remain.

In the UK, online sales are growing, Calver stressed. He said the group's new CRM capability will help it improve service levels further as it aligns its offer to customer needs. 

"We are planning for consumer spending to remain subdued in the UK during the second half of the year. We have made progress with our Transformation and Growth plan, but there is more to do. We continue to strengthen our position, becoming the world's leading mother and baby specialist," Calver added. 

Commenting on the results, Conlumino analyst Greg Bromley said the figures indicate that the retailer is "beginning to move in the right direction", but acknowledged "there is still some way to go before its turnaround is complete".

"The retailer's turnaround appears to be on track, although it continues to face competitive threats at both end of the spectrum, especially in its home market.

"The grocers continue to challenge the retailer on price and convenience, while more premium players such as Mamas and Papas and John Lewis continue to erode Mothercare's sales of bigger-ticket items.

"The UK market isn't going to get any less competitive, so the retailer will have to continue making progress, and ensure it is sufficiently prepared to face the challenges ahead."