Mothercare warns of tough times ahead

City A.M. Reporter
BRITISH mother and baby products firm Mothercare joined the ranks of store groups warning on the trading outlook as Britons start scrimping on spending for their children.

The group, which issued a profit alert in January, said it expected continuing weak demand after sales at UK stores open over a year fell 2.4 per cent in the 12 weeks to 26 March, its fiscal fourth-quarter.

Mothercare also forecast UK gross margin for the 2010-11 year would be down 2.5 per cent, 0.5 per cent lower than previous guidance, reflecting price cuts to clear autumn and winter stocks.

It will target cost savings to offset input cost pressures on gross margin and look for benefits from its property strategy in addition to the £10m already identified.

“Currently in the UK we have very poor consumer demand... Footfall is much lower and as a result competition is more aggressive,” chief executive Ben Gordon said.

Mothercare’s UK woes overshadowed continued strong growth overseas, where franchisee retail sales increased 10 per cent in the fourth-quarter.

The firm said it expected the 894-store international division to continue its rapid growth with at least 150 new stores opening in 2011-12.