Shares soar at Mothercare on signs of revival

Kasmira Jefford
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SHARES in Mothercare leapt eight per cent yesterday after the mothers, babies and toddlers retailer showed early signs of a recovery in its struggling UK market.

Sales at stores open more than a year were flat in the fourth quarter, an improvement on the 8.2 per cent slump in the same period last year, when the retailer was forced to put in place a three-year turnaround plan.

Simon Calver, who was parachuted in as chief executive last May, said faster delivery services and improvement to its website in the quarter helped boost trading, with online sales up 18.2 per cent compared with 0.9 per cent in the previous quarter.

“We have seen a steady improvement throughout the year on the value activity we are doing on clothing, the new product launches, the customer service scores we are doing on a weekly basis in our stores,” he told City A.M.

Calver has also been culling unprofitable stores, with 56 sites shut this year, leaving it with 255 stores. It is aiming to shut a further 55 over the next two years.

In January, Mike Logue, Mothercare’s UK managing director, stepped down with his role made redundant so that Calver could play a more direct role in the UK business.

Mothercare’s international arm posted a 15 per cent jump in sales. Russia – its largest market outside the UK – hit record sales of £120m while Chinese retail sales grew by 80 per cent.

Analysts at Espirito Santo yesterday welcome the sales rise but raised questions over whether Mothercare will be able to fend off competition from rivals such as Kiddicare and Boots in the longer term.

Calver dismissed these comments: “I think by just getting better at ensuring that we are focused on the customer all the time, and we are doing a better job than the competition, that we can give any retailer a run for their money in the longer term.”