Mothercare future under review

 

Ailing retailer Mothercare has put its entire UK business under review after revealing half-year losses of more than £80 million today.

The group, which has 353 UK stores and 969 overseas, has already announced it is cutting 110 UK stores but said it will look to adjust the size and shape of its business in line with current conditions.

No further store closures are currently planned but executive chairman Alan Parker, who is running the company following last month's exit of chief executive Ben Gordon, said "nothing was ruled in or ruled out".

A dire trading performance and the lower value of the Early Learning Centre on the company's books dragged it to a loss of £81.4 million in the 28 weeks to October 8, compared with profits of £300,000 the previous year.

Like-for-like sales in its stores in the UK slumped 7% over the half-year as consumers slashed spending on more expensive items. It expects more "difficult" trading conditions over the key Christmas trading period.

Ben Hunt, analyst at Oriel Securities, said last week the company should consider winding down the UK arm completely.

He said: "Closing the UK business may seem like a radical idea, but people clearly fear the loss-making UK business will continue to be a burden on the company."

However, Mr Parker said he believes the UK business "has the potential to be a great success story waiting to happen".

He added: "I don't rule out closing stores but I don't rule out opening them either.

"We are going through challenges but once we have established the right operating base in the UK, we will be reporting some very encouraging results in the fullness of time."

He said the review would look at getting the UK business's operating cost base right and in particular would look at its delivery and online businesses, which has been "disappointing".

The UK business, which currently operates 352 stores, made an operating loss of £18.5 million, compared to profits of £2.8 million a year ago.

Its profit margins fell four percentage points after it was forced to put on more discounts as consumers reined in spending.

Sales of its clothing ranges were hit by the warm weather in September, which caused it to slash prices to clear its stock.

The poor performance in the UK overshadowed a 15.7% rise in sales to £338.3 million at Mothercare's 975 stores in 55 overseas countries.

The overall profits figure was hit by a one-off charge of £78.5 million, which included reducing the value of its UK business and a £20 million charge for closing stores.

The company slashed its dividend payment to shareholders to 2p from 6.4p per share.

Shares were down 4% today and have now lost three-quarters of their value over the past year.

Kate Calvert, an analyst at Seymour Pierce, put her forecast under review and believes the UK business will remain unprofitable for the next three years.

She said: "We believe that Mothercare has lost its modern day relevance for mums.

"A new chief executive needs to consider how to combat the encroachment of the supermarkets and on-line into its space."

PA

Suggested Topics
Start your day with The Independent, sign up for daily news emails
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Pricing Analyst

£30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K YR1: SThree: At SThree, we like to be dif...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...

Guru Careers: C# Project Team Lead

£55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...

Day In a Page

Fifa corruption: The 161-page dossier that exposes the organisation's dark heart

The 161-page dossier that exposes Fifa's dark heart

How did a group of corrupt officials turn football’s governing body into what was, in essence, a criminal enterprise? Chris Green and David Connett reveal all
Mediterranean migrant crisis: 'If Europe thinks bombing boats will stop smuggling, it will not. We will defend ourselves,' says Tripoli PM

Exclusive interview with Tripoli PM Khalifa al-Ghweil

'If Europe thinks bombing boats will stop smuggling, it will not. We will defend ourselves'
Raymond Chandler's Los Angeles: How the author foretold the Californian water crisis

Raymond Chandler's Los Angeles

How the author foretold the Californian water crisis
Chinese artist who posted funny image of President Xi Jinping facing five years in prison as authorities crackdown on dissent in the arts

Art attack

Chinese artist who posted funny image of President Xi Jinping facing five years in prison
Marc Jacobs is putting Cher in the limelight as the face of his latest campaign

Cher is the new face of Marc Jacobs

Alexander Fury explains why designers are turning to august stars to front their lines
Parents of six-year-old who beat leukaemia plan to climb Ben Nevis for cancer charity

'I'm climbing Ben Nevis for my daughter'

Karen Attwood's young daughter Yasmin beat cancer. Now her family is about to take on a new challenge - scaling Ben Nevis to help other children
10 best wedding gift ideas

It's that time of year again... 10 best wedding gift ideas

Forget that fancy toaster, we've gone off-list to find memorable gifts that will last a lifetime
Paul Scholes column: With the Premier League over for another year, here are my end of season awards

Paul Scholes column

With the Premier League over for another year, here are my end of season awards
Heysel disaster 30th anniversary: Liverpool have seen too much tragedy to forget fateful day in Belgium

Liverpool have seen too much tragedy to forget Heysel

Thirty years ago, 39 fans waiting to watch a European Cup final died as a result of a fatal cocktail of circumstances. Ian Herbert looks at how a club dealt with this tragedy
Amir Khan vs Chris Algieri: Khan’s audition for Floyd Mayweather may turn into a no-win situation, says Frank Warren

Khan’s audition for Mayweather may turn into a no-win situation

The Bolton fighter could be damned if he dazzles and damned if he doesn’t against Algieri, the man last seen being decked six times by Pacquiao, says Frank Warren
Blundering Tony Blair quits as Middle East peace envoy – only Israel will miss him

Blundering Blair quits as Middle East peace envoy – only Israel will miss him

For Arabs – and for Britons who lost their loved ones in his shambolic war in Iraq – his appointment was an insult, says Robert Fisk
Fifa corruption arrests: All hail the Feds for riding to football's rescue

Fifa corruption arrests

All hail the Feds for riding to football's rescue, says Ian Herbert
Isis in Syria: The Kurdish enclave still resisting the tyranny of President Assad and militant fighters

The Kurdish enclave still resisting the tyranny of Assad and Isis

In Syrian Kurdish cantons along the Turkish border, the progressive aims of the 2011 uprising are being enacted despite the war. Patrick Cockburn returns to Amuda
How I survived Cambodia's Killing Fields: Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape the US

How I survived Cambodia's Killing Fields

Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape to the US
Stephen Mangan interview: From posh buffoon to pregnant dad, the actor has quite a range

How Stephen Mangan got his range

Posh buffoon, hapless writer, pregnant dad - Mangan is certainly a versatile actor