Mothercare rescued by online growth

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The Independent Online

The online shopping revolution made up for disappointing sales growth at Mothercare's UK stores in the run-up to Christmas.

Analysts pared back their profit forecasts after the babywear retailer said it was forced to start its sales early following a poor November. Pre-Christmas promotions cost it an estimated 30 basis points of gross margin. "Markdown levels were higher than planned in quarter three, but have now returned to normal levels," the group said.

In the 13 weeks to 12 January, like-for-like sales at its UK stores fell by 0.7 per cent, although, once the contribution from its internet site is included, they rose by 0.8 per cent. Either way, the figure missed analysts' forecasts.

Ben Gordon, the chief executive, defended the performance as being "no worse than in the middle order" in terms of the post-Christmas trading rankings. In contrast to the UK, the group's international arm posted a 38 per cent increase in sales over the quarter.

Mr Gordon said it was "increasingly artificial" to split Mothercare's internet sales from its UK sales figures. Sales at Mothercare Direct, its internet site, grew 22 per cent over the period. Internet sales make up 9 per cent of the group's UK revenues.

Mr Gordon's defence of the group's performance failed to convince many analysts. Steve Davies, at Numis Securities, said Mothercare's poor trading in November was "worrying". Investec Securities, the group's joint house broker, trimmed its full-year profit forecast by £1.1m to £21.3m.