Mothercare continues to suffer losses in H1

Worldwide sales at Mothercare were down 1.4 percent at 627.9 million pounds (835 million dollars) with total UK sales down 1 percent at 229 million pounds (304 million dollars) and total international sales were down 1.7 percent at 398.9million pounds (531 million dollars). Group sales, the company said, which reflect UK sales and reported revenues or receipts from international partners were down 2.4 percent at 339.5 million pounds (451 million dollars).

Commenting on the first half update, Mark Newton-Jones, Chief Executive of Mothercare said in a media statement: “Our international markets remain challenging, primarily as a result of weak trading in the Middle East that is dragging down our overall performance overseas; there is no clear sight as to when things will bottom out in that region. Towards the end of the reporting period, and in subsequent weeks, we have seen a softening in the UK market with lower footfall and spend which is consistent with recent industry reports.”

First half result highlights of Mothercare results

Adjusted group loss before tax was 0.7 million pounds (0.9 million dollars), while UK adjusted losses increased to 9.6 million pounds (12.7 million dollars), and adjusted international profits were down 28 percent to 14.9 million pounds (19.8 million dollars).

In the UK, the company posted growth in like-for-like sales of 2.5 percent, supported by online growth of 5.3 percent. The company said, an improvement in gross margin of 34bps, was more than offset by costs primarily associated with the transformation, including warehouse transition costs, property and depreciation.

Adjusted EBITDA in the UK improved to 1 million pounds (1.3 million dollars), although adjusted losses in the UK increased to 9.6 million pounds (12.7 million dollars). Online sales were up 5.3 percent and now account for 42 percent of the total UK retail sales.

The company now has 75 percent of the store estate or 97 stores in the modern ‘club’ format and closed ten underperforming stores in the period as part of its planned closure programme.

International sales decline 1.7 percent

Total International sales fell by 1.7 percent to 393.2 million pounds (523 million dollars) in actual currency), while constant currency delivered a fall of 7.7 percent. Adjusted profits of international business was down 28 percent to 14.9 million pounds (19.8 million dollars). The company said that the adjusted profit was impacted by lower sales, with the benefit of currency translation.

Space was down 3 percent in the period, opening 68 stores whilst closing 83. The company has refurbished 127 stores in the modern ‘club’ format. Mothercare launched a new website in Pakistan and two new marketplaces in United Arab Emirates and India. The company is now trading online in 23 markets across 30 websites and marketplaces. Online sales have grown by 73 percent in moving currency and 57 percent in constant currency. The company added that international like-for-like sales were down 8 percent, with the Middle East continuing to be a drag, due to its scale, on overall performance. Russia has been impacted by unseasonably cold weather in the summer months and mild weather in autumn/winter.

Mothercare added that towards the end of the reporting period, and in subsequent weeks, it has seen a softening in the UK market with lower footfall and spend. International markets, the company said, in particular the Middle East, remain challenging.

Picture credit:Mothercare