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Mothercare cuts PBT target as UK sales fall in Q3


Mother & baby products retailer Mothercare saw trade fall in the UK during the third quarter but global sales rose, it was revealed today.

Worldwide network sales increased by 9.6 per cent year-on-year for the retailer in the 12 weeks to January 1st, whilst total UK sales declined by 1.9 per cent over the same period.

UK like-for-like (LFL) sales decreased by 5.8 per cent during Q3 with business severely affected by December’s heavy snowfall and the retailer’s management has warned it “expects group underlying profit before taxation for the full year to be below current market expectations”.

Ben Gordon, Mothercare CEO, said: “In the UK, after a strong start to the quarter, sales were impacted significantly by the adverse winter weather conditions which caused widespread disruption, particularly in our out of town stores.

“Direct deliveries were also affected and we cut off Christmas orders early to ensure that our customers received their deliveries on time.

“We estimate that the weather disruption has reduced UK like-for-like sales in the third quarter by approximately four per cent, with toy sales particularly affected, and as a result full year UK gross margin will be one per cent lower than previous guidance.”

Despite delivery disruptions Mothercare’s online business still performed well with Direct in Home sales up 10.2 per cent compared to Q3 in 2009.

International trading was much stronger than domestic business during the period with international franchisee retail sales rising 17.6 per cent during the quarter and total group sales for the year-to-date increasing 1.7 per cent year-on-year.

Mothercare announced ambitious plans last month to open 150 international franchise outlets every year, which Jamie Talmage, Retail Analyst at BDO, said was only possible because of the retailer’s “well honed franchise model that only requires minimal investment”.

It is a model which is working well with stores in its Asia-Pacific region, where Q3 sales have risen 49 per cent, performing particularly impressively.

Gordon added: “Whilst International continues to grow rapidly, we are planning cautiously in the UK where the consumer environment remains difficult.”

Published on Thursday 06 January by Editorial Assistant

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