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Mothercare drops full-year targets as UK sales dive

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Baby and maternity products retailer Mothercare has reduced its full-year targets after seeing a decline in total sales of 6.4 per cent in the 12 weeks to October 1st 2011, it was announced today.

A trading statement from the retailer revealed that UK like-for-like (LFL) sales were down 8.5 per cent including VAT compared to the same period last year.

These disappointing figures shows that trading during the last quarter had significantly worsened for the company, which also owns the Early Learning Centre, as total UK sales for the 27 weeks ending October 1st 2011 fell just four per cent compared to 2010, while LFL sales decreased by 5.7 per cent.

Mothercare now expects full-year performance to be worse than previously imagined and second half sales to be significantly down on previous estimates. CEO of the company Ben Gordon, said: “In the UK, trading conditions have become progressively more challenging and competitive, and our performance has been well below our expectation.

“We have seen a downturn in consumer confidence in the weeks following the UK riots and trading has deteriorated further in the last four weeks.

“Against the backdrop of this weakening trend, we believe that the outlook for the UK business in the important second half has materially worsened and this is likely to lead to a disappointing performance for the year as a whole.”

The specialist business has seen a sizable decrease in homeware sales during the quarter, with Direct in Home sales down 5.8 per cent in the 12 week period compared to a one per cent decrease over the 27 week period.

Despite these disheartening UK results, the retailer has reported a positive performance in the international market, in which it has been busy opening new stores.

International retail sales for the last quarter show an increase of 17 per cent, while results for the previous 27 weeks show a 16 per cent rise.

Worldwide network sales were up 4.5 per cent and 5.7 per cent respectively, reflecting solid trading in the 1,322 stores that the chain operates in 55 countries, with 353 stores in the UK and 969 overseas.

“International continues to perform strongly with retail sales up 17.0 per cent in the second quarter. Both brands continue to expand globally and we have opened a net 75 new overseas stores this year,” Gordon added.

“We are on track to achieve the full year target of 150 new stores and International retail sales growth of 15 per cent to 20 per cent.”

“Despite the difficult trading conditions in the UK, our strategy of focusing on the rapid global expansion of our brands whilst restructuring the UK business will create long-term sustainable value for shareholders,” he said.

Prolonged domestic sales declines have prompted the group to recently trial new format stores as part of plans to reduce its UK property network by 110 outlets to around 266 by March 2013.

Published on Wednesday 05 October by Editorial Assistant

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