Mothercare damaged by collapse in confidence

Close to £80m was wiped from the value of Mothercare yesterday as the retailer warned that UK sales had plunged – and said the outlook wasn't going to improve much leading into the festive season.

In its third profits warning this year, Mothercare said like-for-like sales in its UK stores over the past 12 weeks had fallen by nearly 10 per cent. The decline appears to be accelerating: over the company's first six trading months sales were down by 6.8 per cent, excluding new store openings.

Larger, more expensive items have been particular casualties, theretailer said, adding that it had also suffered during August's riots in London and elsewhere. Sales dropped by a fifth in that week alone.

Despite the bleak picture in the UK, the company can at least point to a better performance at its international outlets, where sales were up by 17 per cent. Even so, the retailer said that the woes it is facing in its home market, where it is gloomy about the outlook in the run-up to Christmas, mean this year's results will disappoint.

"In the UK, trading conditions have become progressively more challenging and competitive, and ourperformance has been well below our expectations," said chief executive Ben Gordon.

"We have seen a downturn inconfidence in the weeks following the riots and trading has deteriorated further in the last four weeks. In particular, the home and travel market has been affected by customers trading down on bigger ticket items."