Mothercare [IRDX RMOC] is focusing on enabling shoppers to buy online and reducing its store network as it looks to a firmly multichannel future. The retailer first announced its digital-first strategy in 2014. Here’s an update from its fourth-quarter trading update.
Fast online growth
Online now accounts for 41% of UK sales at Mothercare and ELC (Early Learning Centre). That figure comes after ecommerce grew by 13.6% in the 11 weeks to March 25, and contrasts with an overall UK like-for-like sales rise of 4.5%. Chief executive Mark Newton-Jones said feedback on its new website had been positive. He added: “Our customer database now stands at over three million active customers, allowing us to communicate seamlessly between our digital and physical channels.”
The role of the store
Mothercare has rationalised its store estate in recent years to reflect the growing importance of internet sales. Its stated strategy is now to become a digitally-led business. By the end of the fourth quarter the company had 152 stores, of which 147 are Mothercare and five ELC. At the end of the last financial year, the group had 172 stores, of which 162 were Mothercare and eight were ELC stores. Some 70% of those remaining are now trading in a new format.
Mothercare’s international sales have benefited from the weakness of sterling following the UK’s vote to leave the EU: its fourth-quarter sales were down 1.7% in constant currency, but when currency fluctuations were taken into account, sales were up by 15.4%. Online sales have grown still faster, by 64% in constant currency and 86% in actual currency. Chief executive Mark Newton-Jones said: “We continue to export our learnings from the UK and as a result, have launched ten new websites this year, bringing our total to 21 countries now trading online. We still see many opportunities in existing and new markets around the world that are open to us.” Overall, Mothercare has 1,338 international stores, following a year in which 144 stores opened and 116 closed.
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