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Mothercare shares increase as profit exceeds expectations


British maternity and childrenswear retailer Mothercare increased its shares by more than 16 per cent yesterday on higher profits as the company revealed underlying pre-tax income of £9.5m for year ending March 29th 2014. This was a 61 per cent increase on the £5.9 million a year earlier and ahead of forecasts of £8.3m.

The retailer reported today that trading had significantly improved in the fourth quarter of its financial year as it shutdown around 35 stores making a loss and worked on making its maternity clothing more fashionable. Despite this, the retailer has been warned it faces “major challenges” and Alan Parker, the chairman of Mothercare, has addressed that the chain must continue work harder: “We are determined to achieve our goal of returning the UK to profitability, growing our international business and building shareholder value over the long term.”

However, sales in the UK slumped 7.5 per cent with like-for-like’s falling 1.9 per cent. Shares in Mothercare have previously dropped by more than 50 per cent in the past year as the company saw through a torrid Christmas and were met with the resignation of its chief executive, Simon Calver.

Greg Bromley, consultant at retail research agency and consulting firm Conlumino commented: “It is very much the international arm that is keeping the business afloat…there is still a huge amount of work to be done, with an urgent need to return its UK business to profitability.”

Mothercare does appear to be signalling intent in its conversion of its Early Learning Centre in London’s Westfield Shopping Centre into a clothing-focused format with a small selection of home and travel items. Finance director Matt Smith commented that Mothercare are “looking to grow clothing, which is higher margin. It’s an area we’ve had success in over the past year. We’d like to make it more of our mix.”

It has since rolled this out to a further three Mothercare stores in its attempt to British clothing and home product rival Next, who appear to be succeeding the chain in selling children’s clothing.

Published on Friday 23 May by Editorial Assistant

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