Mothercare [IRDX RMOC] said its digital transformation was on track, despite falling sales and profits.
The parent and baby specialist, a Leading retailer in IRUK Top500 research, reported total UK sales of £229m in the in the 28 weeks to October 7, down by 1% on the same period last year, but up by 2.5% on a like-for-like basis following Mothercare’s programme of UK store closures, with 10 shut in the first half and one opened. International sales of £398.9m were down by 1.7%, with worldwide sales of £627.9m down by 1.4%, while group sales of £339.5m were down by 2.4%. Pre-tax losses widened to £16.8m from £0.8m last time.
Online sales grew by 5.3% on last time in the UK and by 57%, when currency fluctuations were disregarded, in its international markets. Some 42% of sales took place online in the first half.
Mothercare chief executive Mark Newton-Jones said its transformation was on track, and reflected in growing like-for-like UK sales. “Across the business, we continue to invest and make progress, developing the Mothercare brand into a digitally led, global specialist,” he said. He added: “We are reducing our cost base as we become an even leaner and simpler business, and we have identified opportunities to go faster in this respect.”
He also said that towards the end of the first half and since then it had seen the market soften, with lower footfall and spending in the UK market. “Notwithstanding this uncertain consumer backdrop, the Mothercare brand, whilst not immune, is in a stronger position with a much-improved product and service offer and a more robust business model,” he said.
Online sales grew by 5.3% during the first half, with 42% of UK retail sales taking place online. Of those online sales, 82% took place via mobile devices, up from 80% a year earlier, and 42% were generated by iPads in store, down from 44% last time.
“Using our learnings over the last three years and our rich consumer insight from our database of 2.9m active customers, we are growing our digital capability, focusing on developing a truly personalised experience for our customers,” the company said in the first-half statement.
The retailer has also closed underperforming stores in a move that is seeing it transition to a model with two-thirds of stores out of town and one third in town. In all 97 stores, or 75% of its estate, have now been transformed to its club format. It is also developing its stores as community hubs, with expectant parent events attended by 32,000 new parents and generating sales of £8m.
Mothercare said it was taking its learnings from the UK to international markets, where online sales grew by 57% in the first half. The retailer now trades in 23 countries, via 30 websites and marketplaces, including its own new site in Pakistan and two marketplaces in India and the United Arab Emirates.
Its international business accounts for 67% of Mothercare’s worldwide space and 64% of its worldwide sales.
Warehousing has been consolidated to one campus serving both online and stores. Upgrades to its merchandising and planning systems are designed to enable better stock management and to grow full price sales.