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Mothercare Q2 trading update in line with FY15 outlook

By Prachi Singh

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Mothercare providing update for the 13 week period to October 10, 2015 said that trading remained in line with its full year expectations. The UK business continues to benefit from digital and full price trading strategy while international returned to underlying growth, amid foreign currency headwinds.

Commenting on the trading update, Mark Newton-Jones, Chief Executive Officer of Mothercare, said, “The second quarter results are in line with our full year expectations. The UK is continuing to benefit from our strategic initiatives both online and in store, while international has seen the expected improvement in trading. Whilst international markets remain volatile, our franchise partners continue to have confidence and have added further space during the period. However, foreign currency continues to be a significant headwind.”

International business highlights

International space increased 6.6 percent year-on-year despite the 2 percent reduction during Q4 last year. During the quarter international business saw the opening of 11 stores and ended the period with 1,310 stores.

International retail sales in constant currency went up 5.6 percent benefitting from the delayed end-of-season sale into Q2 due to the timing of Ramadan and Eid. However, currency headwinds continued to make an impact and retail sales in actual currencies were down 5.3 percent. Europe, the Middle East and Latin America saw growth in constant currencies with Asia weaker than last year.

Worldwide sales declined 2.8 percent and total group sales were down 7.1 percent reflecting ongoing store closures in the UK and foreign currency headwinds for international business.

UK sales witness growth

UK grew like-for-like sales by 6.5 percent as a result of the company’s digital strategy growing online sales by 20.4 percent and delaying of end-of-season sale into Q2. The strategy of selling a high proportion of product at full price, led to further growth in gross margins.

Reconfiguring of the UK store portfolio continued with ten closures, three openings and six refurbishments completed in the quarter. Our refurbishment programme will see 20 percent of stores modernised before Christmas. UK is now trading from 173 stores.

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