Mothercare shares plunge on mounting losses and soft UK market warning

 
Oliver Gill
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Mothercare: Baby K - Photocall
Mothercare is in process of rolling out new club-style outlets (Source: Getty)

Mothercare swung into the red this morning and warned of a recent "softening in the UK market", sending shares into freefall.

The London-listed firm group posted six-month losses of £16.8m – which included £16.1m of additional costs.

Markets shuddered at the news with shares falling almost a fifth.

The retailer's chief executive Mark Newton-Jones said:

Towards the end of the reporting period, and in subsequent weeks, we have seen a softening in the UK market with lower footfall and spend which is consistent with recent industry reports.

Read more: Mothercare appoints replacement finance boss

But Newton-Jones insisted the high street darling was "on track with our transformation plans".

Mothercare has pinned its hopes on a costly revamp that includes closing poorly performing stores and setting up new "club" outlets.

The chief exec added: "Not-withstanding this uncertain consumer backdrop, the Mothercare brand – whilst not immune– is in a stronger position with a much-improved product and service offer and a more robust business model."

Half-year like-for-like UK sales rose 2.5 per cent to £229m. International like-for-like sales fell eight per cent.

Mothercare was forced to splash out £7.1m of cash to plug the gap in its defined benefit pension scheme. By the end of September, its retirement pot still had a £68.9m shortfall.

Before taking into account all the firm's planned changes, Mothercare made £100,000 of cash from its operations. But this was quickly wiped out by £12.4m of capital expenditure and £8.9m of cash payments for "adjusted costs".

The firm was forced to go cap-in-hand to its banks, drawing down £24.5m on its lending facility over the period.

Read more: Mothercare gets a helping hand from online sales growth as group sales drop

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