MOTHER and baby products retailer Mothercare is accelerating its expansion overseas, particularly in India, and has raised its profitability target for international stores.
Mothercare, which is taking analysts on a tour of its operations in India, said yesterday it expected total overseas network sales to double to £1bn by 2014.
As well as expansion in many of its existing 53 markets, Mothercare said it had identified Latin America, Scandinavia, Japan, South Korea, Vietnam and north Africa as areas for future growth.
It will open 175 overseas stores in its 2010-11 financial year, up from previous guidance of 150, and 150 a year from 2011-12 onwards, up from a previous target of 100. That will increase overseas selling space by about 15-20 per cent a year.
Mothercare, which has been battling a tough consumer backdrop in Britain, said it would have 70 stores in India by March, and would increase that to at least 200 by March 2015. It is also targeting a 20-30 basis point increase in international profit margins per year, up from its previous goal of 10-20 basis points.
“We can see a clear path to £65m pre-tax profit by March 2014, at which time the international operations could represent two-thirds of group contribution and will still be growing at around 15 per cent,” said Numis analysts, which have a “buy” rating on Mothercare shares.
However, Seymour Pierce’s Kate Calvert remained concerned about growing competition in the group’s main British market from supermarket groups like Tesco and Asda
“While longer term Mothercare will be a great play on global growth, we remain concerned over the underperformance of its UK business, which still contributes the majority of the company’s profits,” she said.