Mothercare planning for future after LFL sales drop

Baby & maternity products specialist Mothercare today released a bullish third-quarter trading statement relating to the future of the business following a tough year, which has seen a significant percentage of its stores close down.

UK like-for-like (LFL) sales excluding VAT dropped three per cent year-on-year for the 13 weeks ending January 7th 2012, but the retailer is confident that improvements being made to its operations stand it in good stead for the coming 12 months.

In May, Mothercare announced that it was closing around 110 UK stores and it was then forced into a strategic review of its business following half-year losses of £81 million announced in November. It is also looking for a new CEO after the departure of Ben Gordon in the summer.

LFL sales for the year-to-date are down 5.4 per cent when compared to the end-of-Q3 position last year, but heavy discounting and better weather conditions at the end of 2011 ensured that December sales were actually up five per cent on an annual LFL basis and highlighted continuing consumer demand for its products.

Mothercare‘s international business continues to prosper, with sales outside the UK up 15 per cent in Q3 and 15.5 per cent in the year to date, but it is on home territory where significant improvements are required if the company is to prove it has a sustainable future on British high streets.

Alan Parker, the Executive Chairman of the group, who is leading the search for a new CEO, said: “Worldwide network sales increased by three per cent in Q3 as a result of continuing strong growth in our profitable and cash-generative international business.

“We have opened our 1,000th store outside the UK and also launched in four new countries – Chile, Colombia, Iraq and Morocco.

“In the UK, the better LFL sales performance was achieved in an increasingly competitive consumer environment. Additional promotional activity was successful in driving a five per cent LFL sales increase in December and managing overall UK inventory levels, which are currently 17 per cent lower than last year.

“The management actions we have already taken, which include a new web platform to launch next financial year, are expected to improve its multichannel platform Direct and overall performance in 2012.”

Results of the board review will be made clear this quarter, when plans for further UK store closures, more multichannel development and a new CEO could be announced.

Mothercare has reduced its domestic store portfolio by nearly a third over the last four years, reflecting the changing face of the British high street and growing competition from supermarkets and online competitors.


Please enter your comment!
Please enter your name here