British mother and baby products retailer Mothercare returned to a sales drop in the UK in the fourth quarter as the trading environment became ‘very promotional and competitive.’
The store said sales dropped 3.4 per cent in Q4, while there was a 7.9 per cent contraction in total UK sales. The company, which operates in 60 countries, also saw like-for like sales drop by 0.9 per cent.
“Whilst clothing sales and volumes have benefited from the launch of the Value essential range in July last year, toys, home and travel in particular have been impacted by the increasingly promotional nature of the market,” Mothercare said.
The group is revamping its British stores and is closing unprofitable ones - 56 were closed in 2012-13 and 13 in Q1 of 2013-14, taking the UK total to 242.
However, Mothercare’s overseas growth showed signs for optimism with international retail sales up 11.3 per cent in constant currency. The group opened a net 47 stores overseas during the quarter, taking the total to 1,116. Online sales were also up by 14.6 per cent.
Liz Faulkner, Consultant at Conlumino, comments: “A drop back into the red in this quarter shows Mothercare has a way to go.
“The recovery of domestic operations for Mothercare is vital to the health of the wider, long-term business, especially because the UK market has the ability to deliver greater profitability in comparison to the franchisee model typically used abroad.”
Led by Chief Executive Simon Calver, Mothercare is in the second year of a three year rejuvenation plan aimed at energising a business that has lost ground to intensified competition from supermarkets and online players. The plan will see investments in online & multichannel, an improvement in service & instore experience and optimisation of product ranges.
The firm said that trading conditions have been ‘challenging’ in both the UK and across European markets and are expected to remain so for the rest of the year.