Mothercare hit with double-digit sales decline

By guest author Sahar Nazir from Retail Gazette

Mothercare has endured another difficult quarter, with double-digit sales decline across the board in its UK market.

The maternity retailer’s like-for-likes for the third quarter ending January 5 plunged 11.4 % year-on-year, while like-for-likes for the year to date dropped 11.2 %.

Storefront (captiion courtesy of Retail Gazette)

Total UK sales fared worse, plummeting 18.4 % for the quarter and year to date.

Mothercare said the results reflected a combination of the difficult consumer backdrop and the aggressive discounting activity undertaken in the prior year that inflated sales for that period.

Sales were also impacted by the retailer’s store closure scheme, part of its CVA programme, with its UK bricks-and-mortar footprint declining 18.4 % during the quarter and for the year to date.

Online sales also suffered a decline of 16.3 %, which Mothercare said was impacted by lower website visits, lower iPad sales in store due to the store closure programme, and a smaller toy offer with less discounting.

When factoring in all of its UK and international markets, Mothercare recorded an overall decline of 18 % in total group sales.

Despite this, the retailer said it still made “strategic progress” because its CVA programme, which was running ahead of schedule.

“Whilst the UK continues to be challenging, in part as a result of our planned restructuring, we are still on course to deliver the necessary transformation,” chief executive Mark Newton-Jones said.

“Crucially, the group continues to be disciplined in its management of cash and is progressively reducing its net bank debt.”

Mothercare launched its CVA last year, which included plans to slash jobs and close down around 60 stores in the UK.

Newton-Jones said that so far, 36 stores were currently transitioning for closure and the retailer would have its store estate dwindled down to 79 shops by the end of March.

“The UK business will now operate with the discipline of a franchise, allowing the wider group to focus on the Mothercare brand and making it stronger globally,” he said.

“Looking ahead, our international business continues to show signs of recovery, although we expect market conditions in the UK to remain challenging with further disruption until April from our store closure programme.

“However, given the pace of our strategic transformation plan, our full year profit guidance is unchanged.”