Mothercare's British Sales Fall 5.9%, But CEO Remains Upbeat As International Sales Perform Well

Mothercare Continues Its Battle To Win Back Mums

British baby and maternity products retailer Mothercare revealed on Thursday it was another retailer suffering from the UK high street's current malaise, with UK like-for-like sales down 5.9% during its third quarter.

The transition to a new online platform and our mobile initiatives looks more positive, with growth of 0.9% during Q3, and further increases in December with sales up more than 12%.

Mothercare is in the process of improving its stores and delivery services, as well as closing loss making stores across the UK and slashing prices in an attempt to win back money conscious consumers who have fled to supermarkets and online retailers.

Last April, the retailer said it would close 111 stores before 2015 and cut 780 jobs in the process. The group secured a refinancing deal with its banks HSBC and Barclays to fund the store reduction programme, increasing lending from £80 million to £90m.

Then in November 2012, it narrowed its losses for the first half of the year to £0.6m, compared with a loss of £4m a year before, but it still carries a lot of debt.

Simon Calver, chief executive of Mothercare, remains upbeat. In a statement, he said: "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.

"The transition to our new online platform has passed the test of peak trading with Direct in Home growing at double-digit rates during December. 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."

Business analyst at Company Watch Nick Hood told the Huffington Post UK that Thursday's results were proof that price reductions and efforts to improve the in-store offering are "failing miserably" to reverse the trend of falling sales, or repel the growing competition from supermarkets and competitors with sharper online offerings.

"Fortunately, the picture is brighter overseas, but international success is unlikely to stem the rising tide of opinion which questions whether Mothercare is still relevant in the UK market," he continued.

"Unfortunately, Mothercare is attempting to re-invent itself against a background of weakening financials. Its net worth has plunged by 75% since March 2011, while it has gone from holding substantial cash reserves to substantial borrowings. It is positioned deep in our warning area, with an overall financial health rating of only 11 out of a possible 100, leaving it vulnerable to the impact of any significant further losses."


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