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Mothercare’s Q3 sales down 7.4%

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Parent & child products retailer Mothercare saw group sales drop by 7.4 per cent in the third quarter, dragged down by UK sales, according to the retailer’s interim management statement.

UK total sales slumped 12.9 per cent in the 13 weeks to January 12th 2013, with like-for-like (LFL) sales down 5.9 per cent.

Despite these negative figures, Mothercare’s CEO Simon Calver believes there are reasons to be positive, commenting: “We have made solid progress during Q3, despite a challenging consumer backdrop for the UK and Eurozone.

“International continues to see double-digit growth and in the UK we have made further progress closing loss making stores.”

International sales increased by 12 per cent in the 13 week period, as 31 new international stores opened, bringing Mothercare’s store portfolio to 1,129 stores across 61 countries.

In the UK however, eight Early Learning Centre stores were closed during the quarter, as well as three Mothercare stores, leaving Mothercare with 269 UK outlets.

Commenting on the retailer’s deterioration in the UK, analyst firm Conlumino’s Managing Director Neil Saunders said: “Mothercare’s UK performance is a concern and, moving into 2013, it will become increasingly essential that its three year transformation plan begins to lead to marked improvement in current trends.

“The focus of the plan is on improving customer service, cutting cost out of the business and downsizing its store portfolio.

“Mothercare faces significant long term challenges to turnaround a UK proposition which has failed to adapt to the evolving UK retail landscape.

“Unless UK performance starts to improve, question marks will increasingly be asked about the viability of operating in its domestic market.”

However, the retailer’s online operations saw an improvement over the period, with multichannel branch Direct in Home reporting sales growth of 0.9 per cent in the quarter and more than 12 per cent in the month of December.

Although Mothercare faces stiff competition from the likes of Kiddicare and John Lewis, as well as Tesco’s latest brand Tesco Loves Baby, which was launched this week in stores across the UK, Calver is confidence about the retailer’s forward-looking strategy.

He said: “Our work towards delivering improved value, choice and service for our customers continues to make an impact and I am very encouraged by the new ranges and innovative product ready to go into stores for spring/summer 2013.”

Published on Thursday 17 January by Editorial Assistant

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