Mothercare knocked by poor performance in home market

 
Kasmira Jefford
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MOTHERCARE, the baby and maternity products retailer, suffered a decline in sales in its third quarter, as recent improvements to its UK arm failed to pull in the Christmas sales.

The group, which has over 1,300 stores worldwide including 269 in the UK, said UK like-for-like sales fell 5.9 per cent in 13 weeks to 12 January, compared with a three per cent decline in the same period last year.

Chief executive Simon Calver said Mothercare was up against tough comparatives on last year when it joined in the aggressive discounting on the high street to keep up with rival retailers.

Online sales rose by 0.9 per cent compared with an 11 per cent rise in the second quarter after a late start to Christmas shopping, with sales up 12 per cent in December.

“People chase unprofitable sales online – clearly we were not going to get into that space,” he said, adding that the group had decided to discount less to protect margins. Calver, who was hired by movie rental firm Lovefilm last April to spearhead the group’s turnaround, insisted Mothercare was on track to return to profit within three years.

The group, which also owns the Early Learning Centre chain, has been cutting down its presence on the high street and now has 269 stores, compared with 311 last April. It eventually plans to have an estate of just 200 stores.

Calver has also cut clothing prices, lowered head office costs and launched new ranges like the Little Bird range from Jools Oliver, wife of TV chef Jamie Oliver.

“Our continued progress with improving value, choice and service for our customers is evident in better prices, new and innovative product and better staff engagement with customers.”

Mothercare’s overseas business continued to grow strongly, with underlying sales up 14.8 per cent.

Mothercare opened 31 stores during the quarter and now has 1,129 shops across 61 countries.

Analysts however remained bearish on Mothercare’s prospects yesterday. Seymour Pierce analyst Kate Calvert said: “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.”