Mothercare woes deepen as sales slide

Mother and baby retailer Mothercare has blamed a “difficult consumer backdrop” for a fall in sales in the UK in its last quarter.

Sales fell 11.4% and online sales dropped more, by 16.3%, the firm said.

The business is in the throes of a UK store closure programme, with 36 currently in closing-down mode. By the end of March, there will be 79 stores, down from 137 in May 2018.

The firm kept its guidance for the financial year unchanged.

Chief executive Mark Newton-Jones said: “Whilst the UK continues to be challenging, in part as a result of our planned restructuring, we are still on course to deliver the necessary transformation.”

Last year, Mothercare underwent a company voluntary arrangement (CVA), which allowed it to shut loss-making shops and reduce rents. It also raised £28m through issuing new shares.

Mr Newton-Jones left in March last year, but then returned in May.

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As well as the difficult consumer backdrop, the company said the fall in sales had also been affected by “aggressive discounting” in the previous year, which had inflated sales in that period.

The figures – which are like-for-like, stripping out changes to stores – are for the 13 weeks to 5 January.

The company – which in November had blamed “negative press coverage” for a fall in sales – said that online sales had dropped because of fewer visits to its website, while the store closures had hit sales ordered on iPads in its shops. There had also been fewer toys on sale and less discounting.

The international business was showing signs of recovery, Mr Newton-Jones said, with sales down 1.1%.

In total, sales were down 18% in the third quarter and down 14.8% in the year to date.

The shares, which a year ago were trading at 40p, rose 1% to 15p in early trading.

Mr Newton-Jones said that while market conditions in the UK would “remain challenging with further disruption until April from our store closure programme”, the company expected its full-year profits to be in line with expectations.

Analysts are expecting a pre-tax loss of about £13m for the full year.