Mothercare losses swell in first half as UK sales tumble

The nursery retailer said adjusted losses before taxation more than doubled to £6.2m during the 28 weeks to October 6, compared to £2.6m a year ago.

However, on a statutory basis – a measure that includes the impact of store impairments, onerous lease charges, restructuring costs, finance costs and foreign currency adjustments – losses narrowed slightly to £14.4m from £16.8m in the first half of last year.

Like-for-like sales in Mothercare’s domestic UK market slumped 11.1% across the six-month period. They increased by 2.5% during the first half of its 2017/18 fiscal year.

Total UK sales were down 14.3% to £196.2m, as online sales fell 7.8% to £8.1m.

In its international markets, Mothercare’s like for likes slipped 3.4%, although that marked an improvement on the 8% decline during the first half of last year.

Total international sales dropped 7.3% to £369.6m.

On an adjusted basis, pre-tax losses at Mothercare’s UK arm ballooned 83.3% to £17.6m, while profits from its international operations were broadly flat at £14.9m.

Mothercare, which launched a CVA earlier this year, said it was “on track” with its transformation plan and store closures were being made “ahead of schedule”.

The retailer said its international business was “showing signs of recovery”, particularly in Russia, China and Indonesia, but lamented “difficult trading conditions” in the UK.

Boss Mark Newton-Jones, who was sacked in April before being dramatically parachuted back into the hot seat the following month, insisted “fundamental” changes to the way the business is being run are creating “momentum”.

Newton-Jones wants Mothercare to focus on being a “global brand” and will operate its UK business “with the rigour and discipline of a franchise, being singularly focused upon becoming economically viable on a standalone basis”.

He said: “Over this period, we have continued our relentless focus to transform Mothercare into a business that has a sustainable and relevant future for its global customer base.

“We have completed the capital restructuring of the business, the UK store closure programme is well underway and due for completion earlier than planned, we are making our sourcing operations more efficient and our cost-saving initiatives are well on schedule.

“This momentum has allowed us to focus on revising the overall structure of the group, something which will help drive a greater focus on becoming a stronger global brand, with improved product design, marketing and distribution of Mothercare products around the world.

“At the same time, in the UK, the team will be singularly focused on managing trading and operations, as a typical franchisee would, with the objective of bringing the UK business back to profitability.”

Mothercare said it remained “comfortable” with full-year profit expectations but cautioned that performance in the remainder of the year would “remain volatile”.