Mothercare surprised investors by sinking into loss in the first half of the year, after a “difficult six month trading period”.
The group reported a loss of £800,000 for the six months to 8th October, down from a £5.8 million profit last year. UK like-for-like sales fell 0.7 percent, but results were boosted by a solid performance internationally. In spite of “volatile trading” across the globe, sales rose 7.7 percent in actual currency.
Trading was hurt by unseasonal weather during spring and summer, leading to bigger price cuts in order to shift stock. Planned warehouse infrastructure changes also had an effect – although they have now been completed, they led to “a reduced flow of product for eight weeks in the summer”, as well as a one-off cost increase. In a statement, the group said:
“We are confident with our investment programme in the UK but we have seen a softening in our UK performance in line with the rest of the market due to poor weather, impacting both sales and margin, as customers responded to heavier discounts. In addition, planned changes to our warehouse infrastructure had an adverse impact on sales as well as costs.”
Mark Newton-Jones, Chief Executive of Mothercare, commented:
“While conditions in the first half have been challenging, the second half has started in line with our plans and the business is well prepared for the important peak season. We expect to make further progress in the second half which will partially compensate for the effect of the headwinds experienced in H1.
“We continue to see opportunities to further develop and improve our business both here in the UK and in our international markets. Our vision remains clear: to be the leading global retailer for parents and young children.”
Mothercare (LON:MTC) shares are currently trading down 5.83 percent at 105.00 (1037GMT).