First baby steps towards growth for Mothercare

Kasmira Jefford
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MOTHERCARE yesterday said its embattled UK business was showing some signs of recovery as it managed to stem the decline in like-for-like sales in the first half.

Chief executive Simon Calver, who was parachuted into the company earlier this year, launched a three year turnaround plan in May pledging to be “ruthless” on costs and bring its UK business back to “acceptable levels of profit” by 2015.

Calver yesterday said the strategy was “showing early signs of progress”, with UK like-for-like sales up 0.3 per cent in the second quarter of the year to 13 October compared with a fall of 6.7 per cent in the previous quarter.

“It’s still early days but we’re encouraged that the UK is beginning to respond positively to the actions taken,” Calver said.

Mothercare closed 31 UK stores in the first half, part of Calver’s strategy to reduce the total to 200. He has also cut clothing prices, price matched competitors in home and travel categories and launched new ranges like the Little Bird range from Jools Oliver, wife of TV chef Jamie Oliver.

Total UK sales fell 8.3 per cent in the first half of the year as a result of the store closures. But its online business returned to growth, with sales up 0.9 per cent, following the introduction of a new website, Direct in Home.

International sales increased by 10.8 per cent, as growth in Asia Pacific, the Middle East & Africa performed at the top end of expectations, helping to offset weaker trading in Europe.

Shares rose 10.65 per cent on the news but analysts remained skeptical.

“We do not believe Mothercare is an easy fix and brand repositions tend to take longer than expected. It will be difficult to make Mothercare relevant again for the modern mother as it has strong competition from Amazon and the supermarkets,” Seymour Pierce analysts said in a note.