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Mothercare looking for new sources of growth as it reports falling sales and widening losses

As a brand

Mothercare says online marketplaces are among the new opportunities that it is considering following its transition from international retailer to brand. 

The nursery clothing and equipment business is now focused on designing, developing and sourcing products that are sold through international franchise partners in more than 700 shops in 37 countries. That, it says,  has freed it from “the burden of a UK store estate, warehousing and the associated operational costs” 

However, that’s not yet restored it to profitability, with falling sales and widening losses largely ascribed to the effects of Covid-19. Mothercare today reported turnover of £85.8m in the year to March 27. That’s 47.9% down on the previous year. Pre-tax losses widened to £21.5m from £8.5m a year earlier. The retailer now aims to pay off net debt of £13.5m within five years, and to improve profitability.

In the UK, Boots is its franchise partner and Mothercare products have been available in Boots’ stores and on its website since last autumn. Today it estimates that more than 80% of franchisees’ shops are now open from lockdowns, although trade is challenging in markets including Russia, India, Indonesia and Malaysia because of the effect of Covid-19 in those markets on footfall and consumer confidence. While sales have grown fast online during the pandemic, this, it says, was not enough to offset the effect of temporary store closures. 

Looking ahead, it now sees opportunities for growth in new markets, since Mothercare products are not yet sold in seven of the 10 top markets for baby clothing and equipment in the world. Those include online marketplaces as well as wholesale and licensing. 

Clive Whiley, chairman of Mothercare, says: “The past financial year has clearly been a challenging one, however, despite the backdrop of the pandemic, we have made a tremendous amount of progress in fundamentally transforming the group. 

“We expect 2022 to be a year of further progress as we focus upon developing our strategy and future plans to optimise the Mothercare brand globally over the next five years. These are exciting times as, notwithstanding the continued impact of the pandemic in many of our franchise partners territories, without the distractions of the last three years we are seeking to accelerate the growth of the business and the Mothercare brand. We look to the future with great optimism having established a strong and efficient platform with multiple opportunities for growth.” 

The brand says that in the first thirteen weeks of its current 2022 financial year, retail sales came in at £94m and adjusted earnings before interest, tax and asset write downs (EBITDA) came in at about £2.5m. 

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