Mothercare launches clothing-focused stores as UK performance disappoints

The embattled retailer has converted its former Early Learning Centre in Westfield London to a clothing-focused Mothercare store. It has since rolled this out to a further three Mothercare stores.

Mothercare finance director Matt Smith said: “We’re looking to grow clothing, which is higher margin. It’s an area we’ve had success in over the past year. We’d like to make it more of our mix.”

Despite being market leader in mother and baby products, Next holds the crown for children’s apparel, according to Smith.

The new format stores house only a small selection of home and travel goods but Smith said it had been “smarter” in selling the category, with better facilities for customers to order online.

Mothercare has also opened its first outlet stores in Rotherham and Fort Kinnaird. Smith said this would allow it to be more controlled in its markdown.

The retailer, which secured more headroom with its banks this month, plans to plough cash into improving Mothercare’s store estate. It will continue to invest in its larger stores, transforming some to its new Edmonton style format.

Mothercare this month asked suppliers for concessions to help claw back margin. Smith said that its suppliers had been supportive and the move would not impact its plan to gain more exclusive products from brands.

The mother and baby retailer, which parted ways with chief executive Simon Calver earlier this year, today reported an underlying pre-tax profit rise from £5.9m to £9.5m in its full year to March 29. Its struggling UK business cut losses by just £100,000 to £21.5m over the year.

Smith admitted Mothercare was disappointed with the UK performance after a poor peak trading. However, he said that momentum had been maintained after its fourth quarter sales improvement.

He insisted Mothercare was sticking with Calver’s turnaround plan as growing international, improving service and keeping the Mothercare business lean – all key planks of Calver’s strategy – was “the right thing to do”.

It was reported that Mothercare was the subject of a potential takeover by private equity firm Advent, although interest is said to have waned. Smith would not comment on speculation over a potential acquisition of Mothercare.

Meanwhile, Mothercare has bolstered is executive team with the appointment of former M&S childrenswear trading director Karl Doyle to the newly created role of group merchandising director. Doyle, who was most recently at Shop Direct, help build on the stock controls introduced to the business over the past year. Mothercare has also promoted UK commercial director Matt Stringer to group sales and marketing director.