Baby goods retailer Mothercare sees UK turnaround plan pay off
MOTHERCARE posted a small rise in first-half profit and said lower losses and improving sales in the UK provided early encouragement for its new turnaround plan.
While Mothercare’s overseas business is profitable, fierce competition from supermarkets such as Tesco and internet retailers like Amazon has hit it hard at home.
This has left the baby goods retailer with too many stores and not enough customers, and exposed a need to boost its online business and improve product ranges.
In September, new boss Mark Newton-Jones tapped investors for £100m to fund more UK store closures and revamp others with video walls and iPads, with the aim of erasing losses by 2017 at a division which accounts for 60 per cent of overall sales.
The firm is also pushing more full-price sales rather than discounts and has said most of its UK stores, which will be cut to 160 from 220 over the next three years, will switch to larger out-of-town formats that can hold more items and services.
Losses at its UK arm narrowed slightly to £13.5m in the first 28 weeks to 11 October, while overall underlying group pre-tax profit rose to £3.3m from £2m a year ago.
Sales at UK stores open for more than a year rose 1.5 per cent, with fewer promotions helping keep gross margins flat after five years of decline.