Mothercare’s UK sales slide amid ‘challenging’ times

UK sales at Mothercare fell sharply in the first half of the year, with the mother and baby products retailer blaming “challenging” conditions.

The company also cited “negative press coverage” caused by its restructuring in May for the 11.1% drop in UK sales.

Mothercare warned it expected its performance to remain “volatile”.

The group is in the midst of a UK store closure programme, with 20 already shut, four more to close before Christmas and 36 earmarked for closure.

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The chain, which has also been through management changes, expects to be left with fewer than 80 UK stores by April 2019.

For the half-year to 6 October, the retailer reported a pre-tax loss of £14.4m, which was a slight improvement on the £16.8m loss posted a year earlier.

“The first half of the year has been particularly challenging for the business. This is set against at backdrop of a weakening consumer market, which was further compounded by the stresses Mothercare found itself in financially,” said chief executive Mark Newton-Jones, who left in March and returned in May as the restructuring started to take shape.

David Wood, who replaced Mr Newton-Jones as chief executive in March and then became managing director in May, resigned on Wednesday, the company said, without providing details of the departure terms.

Shares in Mothercare fell 7% following the release of the results.

Earlier this 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 said the negative press coverage around this restructuring had affected sales and reduced the numbers of customers visiting stores.

UK like-for-like sales, which strip out the impact of store closures, were down 11.1%. Store sales were 13.8% lower while online sales fell 7.8%, reversing a 5.3% rise last year. Total UK sales were down 14.3%.

Emily Stella, an analyst at GlobalData, said online sales had been affected by the decision to halve the number of toys offered by its Early Learning Centre business because they were too geared towards older children.

While Mothercare’s UK business continued to struggle, the performance of its international business showed signs of improvement.

International like-for-like sales were down 3.4% compared with an 8% decline a year ago.

The international business reported a profit of £14.9m, compared with £17.6m of losses in the UK.

“With the majority of worldwide sales and all of profit stemming from outside the UK, and with an increasingly difficult UK retail environment, Mothercare should focus on its international business,” said Ms Stella from GlobalData.