• Mothercare's UK sales fell as fewer customers visited stores.
  • This was offset, however, by growth in online sales, which now represent nearly half of total sales.
  • The retailer remains in financing talks with lenders. 
Mothercare is still in talks with lenders over its financing options

Mothercare is still in talks with lenders over its financing options

Ailing UK-based mother, baby and children's goods retailer Mothercare has booked a drop in UK sales on the back of lower footfall as it remains in dialogue with lenders over refinancing.

In a fourth-quarter trading update today (12 April), the retailer reported a 2.8% fall in UK like-for-like sales, which was offset by a 2.1% increase in online sales. Purchases from its own website were up 7.2%.

In the period ended 24 March, Mothercare said international sales, despite being down 3.7%, were "encouraging" thanks to a return to growth in the Middle East.

"My immediate priority is to ensure Mothercare is put back on a sound financial footing and to improve its financial performance," said CEO David Wood. "We continue to make good progress in reducing the size of our UK store estate in response to changing consumer preferences and in reducing our central cost base, but our central focus must be customers and their experience, securing Mothercare's reputation as the number one specialist for parents."

The company is undergoing a transformation plan that will see it close around 80-100 stores in response to "changing consumer preferences" and in reducing its central cost base.

Wood replaced Mark Newton-Jones as CEO last month, with the new chief reported to be exploring an insolvency process known as a company voluntary arrangement (CVA).

Mothercare to close up to one-third of store network

Richard Lim, chief executive of Retail Economics believes Mothercare's turnaround plan continues to be outpaced by the forceful headwinds sweeping through the industry.

"Although almost half of all sales are now online, the challenge lies with an expansive store estate which is suffering from ever-declining levels of footfall. The straightjacket of too many stores, inflexible leases and upward only rent reviews has debilitated the restructure that is so desperately needed.

"The pace of structural change is catching out many retailers and the constraint of traditional business models have pushed many to breaking point."