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As its UK sales fall 4%, Mothercare looks abroad


Mothercare, the mother & baby products retailer, today posted a 3.6 per cent rise in total sales during its full financial year, primarily gained through international trade.

Total UK sales were flat over the 52 weeks to March 2011 and fell four per cent on a like-for-like (LFL) basis year-on-year, although domestic trading did improve in the fourth quarter.

In the final 12 weeks of the year UK LFL sales reduced by 2.4 per cent but were up 4.7 per cent in total, a significant improvement on the 5.8 per cent LFL decline seen in the Q3 period which included a sluggish Christmas.

Ben Gordon, CEO of Mothercare, said: “In the UK total sales are up 4.7 per cent in the fourth quarter due to increased sales from the new Wholesale business and continuing benefits from our property strategy. The UK trading environment however remains difficult with weaker consumer demand and lower footfall.

“As planned, during the year we closed 26 high street stores and opened 12 parenting centres.”

The retailer’s global operations have been performing much stronger over the year, with international franchise retail sales up ten per cent over the year and an impressive 16 per cent in Q4 compared to the same period in 2010.

Direct in Home, the company’s web-based home delivery service, also saw healthy growth with sales jumping 10.5 per cent over the year but trading dipped in the fourth quarter however with just three per cent growth.

Gordon continued: “International has delivered another strong year with franchisee retail sales up 12 per cent at constant rates of exchange in the fourth quarter and up 16 per cent in the full year with 166 new overseas stores opened.

“The Asia-Pacific region, which includes our joint ventures in India, China and Australia, is growing particularly rapidly with sales up 47 per cent in the year.”

Mothercare currently has 894 overseas stores, including 62 in India, and it plans to continue rapid expansion of this portfolio with an additional 150 global stores pencilled in.

In contrast, the retailer has no concrete plans to extend its UK store numbers as yet and it remains cautious over the short-term market prospects.

In January Mothercare issued a profits warning following slow UK trading over Christmas, anticipating full-year profit-before-tax to be below market expectations.

“We will benefit from continued progress in Wholesale however we expect the profitability of the UK retail operations to remain under significant pressure in 2011/12 with weak demand continuing, although input cost pressures on gross margin will be offset by cost savings,” Gordon added.

“Work is now underway to identify further opportunities to extend our UK property strategy and we will be giving an update on this and on our other key initiatives at our preliminary results in May.”

Published on Thursday 31 March by Editorial Assistant

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