About-turn for Mothercare as it reaps the rewards of the weak pound

Emma Haslett
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Mothercare: Baby K - Photocall
The company said currency tailwinds had helped push up international sales (Source: Getty)

What a difference a couple of months makes. Having warned of "stalling" sales in November, today Mothercare was cautiously optimistic about the year ahead.

The figures

UK like-for-like sales rose one per cent in the 13 weeks to 7 January, pushed up by 5.5 per cent online sales growth.

That was indicative of Mothercare's shift in priorities - with online now making up 40 per cent of its UK sales, today the group said it ditched 4.5 per cent of retail space during the third quarter.

Meanwhile, international sales fell 5.9 per cent on a constant currency basis - but rose 13.2 per cent in actual currency, thanks to the weak pound.

Shares rose 1.1 per cent to 114.75p in early trading.

Why it's interesting

Things were looking bleak for the retailer back in November, when it took an exceptional charge of £6.7m on property warehousing, international stock and a provision in China, and warned its sales and margin had "stalled".

That wasn't unexpected. Mothercare has been struggling for a number of years - making its first profit in five years in May this year.

But it looks like a new focus on improving its product, as well as weaning itself off an addiction to sales, has paid off - although the weakness of the pound didn't hurt either.

What Mothercare said

Chief executive Mark Newton-Jones said:

The UK returned to growth following the challenging summer trading period. We maintained our focus on product improvement and full price sales while prudent stock management allowed us to enter the end-of-season-sale after peak trading with less stock than last year. Margin remains within our guidance for the full year.

International continues to benefit from currency tailwinds, however underlying performance continues to be mixed in spite of many markets returning to growth. Both China and Russia improved, while the Middle East continues to be challenging.

In short

After years of struggling, the weak pound has given Mothercare something to be optimistic about.

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