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Mothercare moving ‘in the right direction’ as losses narrow and online sales improve

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Mothercare executives have said the multichannel nursery retailer is “moving in the right direction” after a year in which sales decline has slowed, losses have narrowed and online sales have seen a significant improvement.

A year into its transformation programme, the retailer said, in full year results published this week, that its Direct in Home online sales grew by 18.2% in the final quarter of its financial year, taking total sales growth in the channel to 4%, following the move to a new online platform and the introduction of improved delivery options to store and to home. These included the introduction of click and collect earlier this month, which already accounts for about 20% of online sales.

“We are becoming more competitive online and offering the services that many other businesses have been doing for some time,” said chief executive Simon Calver in his review of the business. He added: “Whilst our Direct in Home sales have responded well to the improvements we have made during the last year, Direct in Store sales have been disappointing and at £33.9 million were down 11.5%.”

Other multichannel highlights included the launch of an iPhone mobile app, which has been downloaded 140,000 times since it was launched at the end of November.

Total group sales fell by 7.8% to £749.4m in the year to March 30, compared to the same time last year, while pre-tax losses fell to narrowed to £21.5m from £102.9m at the same time last year. Total international sales grew by 8.4% to £728.7m but total UK sales fell by 10.8% to £499.7m. Like-for-like international sales, which strip out the effect of store openings and closures, grew by 5.6%, while UK like-for-likes fell by 3.6% over the year. The previous year, UK like-for-likes had fallen by 6.2%.

Calver said his first year at Mothercare had been an “exciting and challenging” one. “For all our customers, we are improving value, introducing new and more innovative products and investing in even better service,” he said. “It is still early days and our customers are already beginning to respond positively buying more products on each trip and increasing their customer satisfaction scores.”

He added: “Our results reflect the progress we have made against our plans to reduce UK losses and deliver continued International profit growth. After the first year of our transformation and growth plan, the company is on a firmer footing. I look forward to building on this in the years ahead, as the world’s leading multichannel mother and baby specialist.”

Multichannel is one of the company’s four strategic objectives. The others include operating a lean retail structure, returning the UK to profitability, and driving international growth. In his review of the business Calver said the year had seen the company progress against all of these. He added: “We have improved value, choice, service and delivery for our customers both in store and online and these are themes that we will continue to build on in the years ahead.”

The company said it now had a global ecommerce platform in place, which will be rolled out to help its international partners move ahead of local competition in overseas markets with multichannel trading.

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