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Mothercare warns on profits as sales fall

Baby goods retailer Mothercare has issued a profit warning after reporting a big fall in sales over the crucial Christmas trading period.Like-for-like sales fell 7.2% year-on-year, while online sales fell 6.9%.The retailer said it had reduced its total number of stores and discounted heavily in its end-of-season sale.It does not expect any improvement in short-term market conditions and adjusted group profit for the year is now likely to be between £1m and £5m.Analysts had previously forecast that profits would be about £10m.Chief executive Mark Newton-Jones said there had been a “softening” in the UK market, with fewer people visiting its stores and lower website traffic.”In our UK business, we took a conscious decision to remain at full price to protect our brand positioning prior to Christmas, but to then discount more heavily in the end of season sale,” he said.”We have subsequently seen good progress with strong sell-through rates on autumn/winter clearance lines, albeit these carry lower margins and will lead to a further reduction in full-year margin as a result.”‘Challenging’ performanceMothercare said international sales were down 3% year-on-year when the impact of currency movements were stripped out and 6.8% lower in actual currency.However, key markets were showing “signs of improvement”, with a return to moderate growth in the Middle East and Russia.”Whilst the performance of the business has been challenging in the last few months, we remain singularly focused on transforming Mothercare to be the leading global retailer for parents and young children,” Mr Newton-Jones said.Mothercare now has 143 stores in the UK, of which four are Early Learning Centres.The retailer said online sales now represented about 42% of its total sales.Like-for-like sales are those from stores that have been open at least a year.
Source: BBC News

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My name is Joel Bissitt. I have been an entrepreneur for 24 years and have run many small businesses across various sectors. For the last 10 years I have worked mainly within online media, franchising and small business start-ups.

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