Monday, 10 December, 2018

High street woes-Mothercare warns on profit after decline in Christmas sales

Mothercare High street woes-Mothercare warns on profit after decline in Christmas sales
Nellie Chapman | 10 January, 2018, 12:07

Mothercare's share price has slumped after it issued a profit warning following disappointing sales over Christmas.

The UK maternity and childrenswear specialist is the second big high street name to warn on profits after Debenhams said last week it would cut jobs and close more stores after a poor festive period.

The company said online sales in Britain fell 6.9 percent during the 12 weeks to December 30, including the key Christmas season.

Looking ahead, Mothercare said it is not expecting any improvement in the short-term market conditions for the United Kingdom and it now anticipates that full year adjusted group profit is likely to be in the range of £1 million to £5 million.

Mothercare chief executive, Mark Newton-Jones, said: "There has been a softening in the United Kingdom market with lower footfall and website traffic resulting in lower spend in both stores and online". The figures continue trends seen in first-half results at the retailer, a Leading trader in IRUK Top500 research and, Mothercare said today, reflects continuing consumer trends that it flagged up in half-year results.

British baby goods retailer Mothercare has warned that its full-year profit would be much lower than earlier expectations as it did not see any improvement in the United Kingdom market in the short-term.

Mothercare has been battered by weak consumer confidence brought about by inflation, which hit 3.1 per cent last month.

Since taking the helm three years ago, Newton-Jones has closed 100 loss-making United Kingdom outlets and modernised 70 per cent of the remaining stores.

Mothercare took a "conscious decision" to remain at full price prior to Christmas in order to protect its "brand positioning" and then "discount more heavily" in end-of-season sales.

Newton-Jones added that Mothercare attempted to remain at full price ahead of Christmas, but then began discounting heavily and this chipped away at its profit margins. At the time it said lower footfall and spending were hitting its core United Kingdom market.

The company is working to slim down the total number of United Kingdom stores to between 80 and 100 from 143, having shuttered several locations over the past nine months as part of those plans.

"In line with previous announcements and as part of our transformation strategy, we have taken decisive action to reduce our central cost base", Newton-Jones said.