Mothercare UK sales up, international continues to suffer

Mothercare like-for like sales in UK for the 11 week period to March 26, 2016 increased 2.1 percent during the fourth quarter with support from online sales which were up 5.6 percent. International, the company said, continues to be affected by ongoing economic and currency headwinds.

“Overall Group underlying profit for FY2016 is within the range of current market expectations. The UK is responding well to our strategy with continued sales growth and improved margins. International continues to be impacted by adverse currency and weakening consumer confidence in some key markets as economic headwinds persist,” said Mark Newton-Jones, Chief Executive Officer of Mothercare.

Highlights of the fourth quarter

Continued focus on full price sales in UK led to another quarter of stronger gross margins. Mothercare ended the quarter with 170 stores including 162 Mothercare and eight ELC of which 56 stores were trading in the new modern refitted format. Total UK sales were up 0.8 percent as both online and store sales benefitted from the ongoing strategy, despite the planned 6.4 percent year-on-year reduction in space.

International retail sales in constant currency were down 9.7 percent with currency further impacting retail sales in actual currency which were down 10.8 percent. All four regions saw a reduction in both constant and actual currency sales. In the Middle East consumer sentiment was impacted by the sustained lower oil price, resulting in a significant decline in constant currency sales. In Asia, China in particular, was affected by weakening consumer confidence. Europe and Latin America were impacted by adverse currency moves.

Latin America saw an increase in store numbers, but a small reduction in space. Europe saw a similar reduction as the company rationalised unprofitable space. In Asia and the Middle East, it grew space despite current economic conditions. The company ended the quarter with 1,310 stores including 947 Mothercare and 363 ELC stores in the international markets.

“In the year ahead, we expect to make further progress in the UK. However, our international markets are likely to remain challenging with the current trends in space, sales and currency continuing into the new financial year,” added Mark Newton-Jones.