Losses have mounted at embattled childcare retailer Mothercare, which blamed it on critical press coverage of its financial woes as the company undergoes a restructuring process.
Group managing director David Wood, who acted as interim chief executive earlier this year, stepped down from his position yesterday. Its share price fell more than 10 per cent as markets opened this morning.
Total group revenue fell more than 13 per cent to £295m in the six months to the beginning of October, down from £339.5m in the same period in 2017.
Mothercare posted a total adjusted loss before tax of £6.2m, widening 138.5 per cent from its £2.6m loss last year.
In the UK, like-for-like sales fell 11.1 per cent, down from growth of 2.5 per cent in 2017. The group performed marginally better internationally, with like-for-like sales losses narrowing to 3.4 per cent from eight per cent last year.
Its net debt now stands at £21.5m, down 42.9 per cent from £37.6m in 2017.
Why it's interesting
The firm said a refinancing of the group and a spate of store closures, as well as "the subsequent negative press coverage" was to blame for its declining UK sales performance.
Mothercare has been actively trying to save the business from entering insolvency, with a total of 50 store closures planned as part of an ongoing company voluntary arrangement. The company said it has closed 20 so far, with four more scheduled to be closed before Christmas.
"Mothercare has become a byword for trouble on the high street, and today’s results highlight some home truths as its financial difficulties show no sign of improving," said Julie Palmer, a partner at Begbies Traynor.
"Having already been relegated from the FTSE 100 after a significant sales drop, the baby may well have to be thrown out with the bath water if these measures don’t work."
The company also axed 200 head office jobs last month.
Mothercare confirmed that it remains on track to meet market expectations for full-year earnings, however noted that its performance will continue to be volatile as the refinancing programme continues.
What Mothercare said
Mothercare chief executive Mark Newton-Jones said:
"Over this period, we have continued our relentless focus to transform Mothercare into a business that has a sustainable and relevant future for its global customer base.
"We have completed the capital restructuring of the business, the UK store closure programme is well underway and due for completion earlier than planned, we are making our sourcing operations more efficient and our cost-saving initiatives are well on schedule."
"Our international business is showing signs of recovery after a difficult few years and some core markets, including Russia, China and Indonesia, have moved into growth. The UK retail environment, however, remains very challenging and given the ongoing uncertainty with consumer confidence, alongside the short-term impacts of our operational changes and restructuring programme, we expect performance in the remainder of our financial year to remain volatile.
"Thereafter we are confident that our strategy will ultimately reinvigorate the business and restore Mothercare as a leading global specialist for parents and young children."