Mothercare sales continue to suffer amid challenging UK market

Mothercare plc, for the 15-week period to July 13, 2019 said, online sales were impacted by the extensive store closure programme and the loss of iPad sales in those stores, leading to an overall reduction in on-line sales of 12.1 percent, while total UK sales were 23.2 percent lower than last year. International retail sales declined 4.5 percent in constant currency and 2.1 percent in actual currency.

Commenting on the first quarter update, Mark Newton-Jones, Chief Executive Officer of Mothercare plc, said in a statement: "The UK retail market remains challenging and though the rate of decline in LFL sales has moderated, margin investment in promotional activity has been necessary to stimulate sales, both in our stores and online. The impact of this has negated much of the margin benefits we had expected to materialise. Furthermore, we have observed a lower than expected transfer of sales following the CVA store closure programme which completed in early April 2019."

Highlights of Mothercare's Q1 trading

UK LFL sales improved to 3.2 percent, with stronger performance towards the end of the quarter. The company’s UK store estate now comprises 79 stores down from 134 stores last year. The company witnessed growth in the key international markets with India reporting 5.5 percent rise, Indonesia 10.5 percent and Russia 3.4 percent, offset by retail sales decline in the Middle East of 11.1 percent in constant currency. The company said, franchise partners continue to invest in the Mothercare brand, increasing space by 5.6 percent across 1,014 stores.

The company expects the medium-term outlook for the UK market to remain uncertain and volatile, accompanied by fragile consumer confidence and against this backdrop and the need for continued promotional activity, Mothercare said, gross margin improvements in the UK are expected to take longer to materialise than previously anticipated Accordingly underlying full-year profitability before tax is forecast to be broadly comparable to the prior year, inclusive of an estimated negative impact of 2 million pounds of adopting IFRS16.

Picture:Facebook/Mothercare UK