Mothercare profits fall as core UK arm narrows losses

The nursery specialist said pre-tax profits after exceptional and non-underlying items dropped 26.8% to £7.1m in the 52 weeks to March 25.

On an underlying basis, pre-tax profits across the group were broadly flat at £19.7m despite a 2.2% drop in group sales to £667.4m.

Mothercare’s underlying losses in the UK narrowed to £4.4m compared to £6.4m the previous year, despite what it called a “challenging” first half, in which sales and margin “stalled”.

The business said it blamed the first half performance on the unseasonable weather during spring and summer, and warehouse infrastructure changes, which reduced product flow to stores for eight weeks.

Across the full year, like-for-like sales in the UK grew 1.1%, compared to a 3.6% uplift the previous year.

Total UK sales were flat at £459.4m. 

Mothercare said 41% of its UK revenues came from its ecommerce platform, which returned to underlying profit in the second half.

Its British bricks and mortar estate continued to be refreshed, with 70% of shops now operating in the refurbished ‘club’ format.

Overseas operations

Internationally, Mothercare suffered a 4.1% drop in like-for-like sales as it continued to struggle in the Middle East.

However, total sales from its overseas operations benefitted from currency tailwinds, jumping 10.6% to £762.5m.

Sales were also aided by the launch of 10 new international websites during the year.

Mothercare and now operates 21 transactional sites across the globe, including its core UK website. 

The retailer’s boss Mark Newton-Jones said he was “pleased” with the progress of the retailer’s turnaround strategy, but insisted it was “only half way through” the transformation plan.

He added: “Following a difficult start to the year, the UK recovered in the second half, returning to underlying profit for the first time in six years.

“International markets showed signs of recovery with strong growth in Russia and Indonesia, and a sales recovery in China, albeit the country is yet to return to positive cash profit.

“Through our work over the past 3 years and with an extensive database of over 3m, we have developed a far deeper understanding and insight into our customers and the importance of our brand to them. This knowledge can now inform us as to how we shape our business and our ranges, to become ever more relevant to our modern digitally enabled customer.”

Newton-Jones added that store numbers would reduce “over time” as it focuses on a key conurbations across the UK.

Mothercare is also concentrating on the maternity, newborn, baby and toddler categories in order to become “a true specialist” in those sectors and create a “leaner, more agile business.”