Mothercare to slash prices to boost UK sales
MOTHERCARE revealed the details of an ambitious three-year plan aimed at reviving its struggling UK business yesterday, as the baby products retailer slumped to a £103m loss.
Shares rose more than 23 per cent after Simon Calver, who joined in April from online movie rental firm Lovefilm, pledged to be “ruthless” on costs and bring its UK business back to “acceptable levels of profit” by 2015.
As well as scaling back its UK estate from 311 to 200 stores, the group plans to cut head-office payroll costs by 16 per cent and introduce a greater range of products at different, more competitive, price points.
Calver conceded that the retailer was being “squeezed in the middle” from high end specialist retailers on the one side and supermarkets offering cheaper prices on the other.
“Pricing has been at the heart of the problem”, he said. “Customers are telling us that we are a well trusted, well respected brand…but we need to prove our value perception.”
Clothing prices will be cut by around 10 per cent from the autumn.
His comments came as the group posted a six per cent fall in UK like-for-like sales to 560m in the year to 31 March. After a one-off charge of £104m, due in part to an Early Learning Centre writedown, Mothercare’s pre-tax losses came to £103m from an £8.8m profit last year.