Mothercare says it is ahead of schedule in its store closure plan. By March 2019, it will have 79 stores, down from 137 in May 2018.
Mothercare’s problems continued over the key festive trading period as the retailer blamed a sharp fall in sales on a tough consumer backdrop and its decision to offer fewer discounts than a year earlier.
The struggling baby and maternity chain said sales at UK stores open for more than a year fell by 11.4% in the 13 weeks to 5 January, while online sales tumbled by 16.3%.
Mothercare blamed the drop in online sales on “lower website footfall”, fewer promotions and a smaller range of toys compared with the same time a year earlier.
The retailer said its store closure plan was ahead of schedule, with another 36 shops to close over the next three months. By the end of March, Mothercare will have just 79 shops in the UK, down from 137 in May last year.
Mark Newton-Jones, the chief executive, said Mothercare was focused on reducing debt and creating a “leaner” business.
“Whilst the UK continues to be challenging, in part as a result of our planned restructuring, we are still on course to deliver the necessary transformation,” he said. “The UK business will now operate with the discipline of a franchise, allowing the wider group to focus on the Mothercare brand and making it stronger globally.”
In the trading update for Mothercare’s third quarter, Newton-Jones said market conditions in the UK were expected to remain challenging and left the company’s profit guidance unchanged, with a pretax loss of about £13m expected for the full year to 24 March.
Neil Wilson, analyst at markets.com, said the sharp drop in sales was worrying: “Yes the transformation programme is under way with cost savings promised. But the sales figures appear very grim indeed, albeit generally the market has accepted it’s going to be very choppy sailing until land is sighted.”
He added that the although the international market is forecast to pick up but the UK outlook remains very cautious, with a new Mothercare profits warning possible.
Source: The Guardian