Mothercare and Laura Ashley target overseas sales
Friday 01 April 2011
The retail stalwarts Mothercare and Laura Ashley yesterday vowed to press ahead with their international expansion plans in the face of deteriorating trading conditions in the UK.
Mothercare – which opened 166 new stores overseas in 2010-11 – said it plans to open a further 150 this financial year, as its UK underlying sales fell by 2.4 per cent for the 12 weeks to 26 March. Ben Gordon, the chief executive of Mothercare, said: "The UK is an unsure and slightly nervous environment but international is booming." Similarly, Laura Ashley, the furniture and clothing chain, is set to open its first stores in Indonesia and India in the second half of this year through franchise partners. It will continue to "consolidate" its number of UK stores.
While Laura Ashley nearly doubled pre-tax profits to a record £19.3m for the year to 29 January, its UK retail sales fell by 4.2 per cent over the last eight weeks in the wake of a marked slowdown in consumer spending.
The gloom in the sector is unlikely to be lifted by the high street bellwether Marks & Spencer's fourth quarter trading update on Wednesday. According to consensus forecasts, M&S is set to report a 6.2 per cent slump in like-for-like general merchandise sales, primarily clothing, for the 13 weeks to 2 April, although it is expected to have grown its food sales by 1.3 per cent.
The retailer's UK underlying sales are forecast to fall by 2.5 per cent in the quarter, down sharply from growth of 2.8 per cent in its third quarter. But M&S is still forecast to make profits of £709m in 2010-11.
Mr Gordon lauded Mothercare's recent performance in China, Russia and Australia, but was particularly effusive about India, where it has 62 stores run by franchise partners. He said: "There is huge potential in India."
Mr Gordon explained that there are 24 million new babies each year in India, which has a population of more than 1.2 billion, but just 795,000 were born last year in the UK. Total sales at Mothercare rose by 10.2 per cent in the fourth quarter. But it had to discount to clear its UK winter stock, which dragged its gross margins down by 2.5 per cent over the year to 26 March.
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