Mothercare hails progress but sales decline continues

By

Sandra Halliday

Published
Jan 9, 2019

It’s been hard to find good news in most of the announcements made by mother-and-baby products retailer Mothercare in recent periods, but the company said on Wednesday that it had made “strategic progress in spite of UK headwinds.”

Was that the good news we’ve been waiting for? Not really, as the sales figures weren’t very encouraging. In the 13 weeks to January 5, UK like-for-like sales fell 11.4% “reflecting a combination of the difficult consumer backdrop and the aggressive discounting activity undertaken in the prior year that inflated sales in that period.”

Online sales even declined, by 16.3% on the back of “lower website footfall, lower iPad sales in-store due to the store closure programme and a smaller toy offer with less discounting.”

But at least it saw a “successful reduction in stock for the end of season sale, 23% lower than the prior year, with stock clearance activity in line with plan.”

International retail sales were down 1.1% in constant currency and down 3.2% in actual currency, but “retail sales in core markets are in line with last year in constant currency.”

But what it called an “improved trend in international retail sales relative to prior quarters,” was countered by the “challenging trading conditions in the UK.”

Sales were “impacted by lower levels of discounting and less clearance stock relative to the prior year.” But the firm is “on track to achieve all elements” of the group's strategic transformation plan, together with at least £19 million of annualised cost savings and a cash sum of £14.5 million from the completed sale of the UK head office.

CEO Mark Newton-Jones highlighted the firm’s reduction in debt, the progress with the store closure programme (it’s ahead of schedule), and the fact that “the UK business will now operate with the discipline of a franchise, allowing the wider group to focus on the Mothercare brand and making it stronger globally.”