Mothercare looks overseas as UK business shrinks

Baby products retailer Mothercare, facing intensifying competition in Britain, said its overseas sales rose 11 percent in the first quarter, contrasting with a more than 10 per cent fall in total sales in its home market.

The company, which also sells maternity wear, said comparable sales in the UK fell 6.7 per cent in the 15 to 14 July. Total UK sales fell 10.2 per cent.

The company, which operates in 59 countries, said it plans to open 50 stores outside the UK in the second quarter. The retailer opened a net 25 stores outside the UK in the first quarter, bringing total number of overseas stores to 1,053.

Mothercare's shares rose as much as 12 percent on the London Stock Exchange as the comparable UK sales were slightly better than some market analysts had expected.

"With what we see coming through from franchise partners on future orders, (and) adding 50 stores in the second quarter of this year, we're expecting to be in line with our stated goals on international (sales)," Chief Executive Simon Calver told Reuters.

Mothercare has said it expects overseas sales to grow 20 per cent this year.

"International sales look weak at first sight, but forward orders and store opening plans suggest the business should be on guidance for the full year," Numis Securities analyst Andrew Wade said in a research note.

Oriel Securities analyst Eithne O'Leary said she had been expecting a fall of 9 per cent in like-for-like UK sales.

CEO Calver said the fall in total UK sales reflected store closures. Mothercare, which is facing intense competition from supermarkets and internet retailers in a weak economy, said it closed 16 stores in the UK in the quarter.

The company, which now has 311 stores in the UK, has said it plans to shut 111 outlets in Britain over the next three years as part of a plan to return its domestic business to profitability by 2015.