The Christmas trading season was something of quick-draw for retailers, after firing off a raft of promotions to boost sales that culminated in Black Friday – the UK’s biggest ever shopping day.
Yet those that do not get caught in the crossfire of promotional activity can have the upper hand, according to Mothercare CEO Mark Newton-Jones.
The former Shop Direct boss, who was parachuted into the business last year, said his decision to delay its end of season sale until Boxing Day helped protect margins and lift like-for-like sales by 1.1 per cent over the third quarter to 10 January.
“We said we would become a full price retailer and by doing that you have to hold your nerve and not go into sale pre-Christmas,” Newton-Jones said. The strategy paid off, he added, as the company sold 20 per cent more products at full-price in December than it did last year.
Black Friday sales, a US import, has become a permanent fixture in the retail sales calendar, with consumers coming to rely on heavy discounting in the run-up to Christmas – a change which Newton-Jones warns is not necessarily for the best.
“I have spent a decade running online catalogue businesses and that last week in November has always been the biggest week of the year. But this year it was hyped and a lot of discounts were put into what would have been the biggest week anyway. It definitely increased footfall, but it increased footfall into discount. I don’t think that is particularly sensible,” he said. In October last year, Mothercare launched a £100m rights issue to help pay down debt and fund a turnaround that includes closing a further 75 loss-making stores, revamping existing ones and improving its product ranges.
Online sales jumped 16.1 per cent in the period thanks to more customers using click and collect. It now accounts for a third of Mothercare’s online business, but Newton-Jones believes this could double over the next two years.
The group’s international business, which spans 60 countries, grew 14.4 per cent at constant currency in the period, but rose by just five per cent when including the effect of adverse currency movements.
With a growing business overseas (it opened 100 stores in the last nine months) and a business on the mend in the UK, Newton-Jones feels confident about the future.
“The big picture here is that we have stabilised margins and we are putting in the foundations for the future. But it’s still very early days. This isn’t it – far from it. There are going to be lots of bumps in the road.”