// Like-for-like sales fell 2% at Mothercare’s UK business in the six months before it went into administration
// Online sales dropped 13% year-on-year, while total sales were down 19.2%
// Pre-tax loss in the UK hit £12.2m, from £19m the year before. Group-wide, losses widen to £21.2m, from £18.5m last year
// CEO Mark Newtown-Jones: “We struggled with the misperception that Mothercare in its entirety had gone out of business”
Mothercare has reported another set of losses and declining sales in its half year report, as bosses fight a perception it had gone bust well before it entered administration.
For the half-year period ending October 12, Mothercare said like-for-like sales in its core UK market dropped two per cent year-on-year – although this was an improvement on the 11.1 per cent decline recorded the same time last year.
Online sales in the UK also dropped 13 per cent year-on-year, while total sales for the company as a whole dropped 19.2 per cent year-on-year.
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Mothercare’s half-year pre-tax loss hit £12.2 million in the UK, a 36.2 per cent improvement on the loss of £19 million the year before, while adjusted international pre-tax profit fell 22.1 per cent to £12.2 million.
However, for the business a whole, pre-tax losses from continuing operations widened by 14.6 per cent year-on-year to £21.2m, compared to £18.5m last year.
In addition, net debt spiralled to £24.5 million, from just £6.9 million on March 30.
The trading update comes a month after Mothercare placed its UK business into administration, after 10 years without making a profit.
Chief executive Mark Newton-Jones revealed that as the retailer tried to cut costs, scaling back to only 80 stores – from 250 in 2014 – customers thought Mothercare was disappearing from the high street entirely.
“As we reduced the store estate, we did not see sufficient trade transfer to the remaining stores or move online,” he said.
“As consumers watched their local stores close, we struggled with the misperception that Mothercare in its entirety had gone out of business.”
As Mothercare was strapped for cash last year, it was not able to advertise effectively to correct that misconception.
Newton-Jones said the retailer had tried to find a new owner and had plenty of interest, but shortlisted retailers did not want to take on the shops, warehouse infrastructure or the Mothercare head office.
“We could see no reasonable prospect for Mothercare’s UK operation to be sold in its entirety, and had we kept the business as our own, we could no longer afford to continue to fund its losses,” he said.
“As a board, we concluded that the only future for the Mothercare brand in the UK was as a franchise, operating in the same fashion as all of our other territories around the world.”
The retailer now plans to focus on its international business, where like-for-like sales dropped 5.7 per cent due to pressure in the Middle East.
Total international retail sales for the half-year period also fell 1.6 per cent year-on-year to £316.4 million.
Mothercare plans to refocus its product design on international demands, rather than marketing products made for a UK audience to an international market with small tweaks.
The business closed 45 more international stores than it opened over the period, as it moved into larger shops.
Middle East online sales grew 120 per cent, and were up 38 per cent in India.
“There are 130 million babies born every year across the world, compared to 700,000 in the UK, and the group will now look to drive value for shareholders by harnessing that potential,” Newton-Jones said.
with PA Wires
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