Mothercare culls shops as profit dives

Mother and baby products firm Mothercare said it would close over a quarter of its UK stores over the next two years as it responded to a 23 per cent slump in year profit.

The firm, which issued a profit warning in January as sales falls at its core UK business offset rampant growth overseas, said it would transform its in-town store estate within two years by taking advantage of 120 lease expiries.

It said about 110 stores would be closed, while 40 would benefit from rent reductions by March 2013.

This would reduce occupancy costs by about £18m, benefiting UK profit by at least £4-5m per annum from March 2013.

Mothercare made an underlying pre-tax profit of £28.5m in the year to 26 March.

Mothercare, which currently trades from about 370 UK stores and over 890 overseas, said worldwide network sales increased 7.1 per cent to £1.16bn.

International sales jumped 16.3 percent as the firm opened 166 new stores.

However, sales at UK stores open over a year fell four per cent as Britons started to scrimp on spending for their children in the face of tough macro headwinds.

Mothercare, which is paying a total dividend of 18.3 pence, up 8.9 per cent, said it was planning 150 overseas store openings in 2011-12 but expected trading to remain tough in the UK.

Shares in Mothercare have lost a quarter of their value over the last year.