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Mothercare reports early progress in turnaround towards digital first

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Mothercare today set out its next steps on the path to becoming a digital-first business, armed with £95m from its rights issue to spend on achieving its aim.

The company’s ambition is to achieve a turnaround towards becoming the “leading global retailer for parents and young children”. Today it showed early signs that the turnaround was working, with like-for-like UK sales up by 1.5% in the first half, compared to the same period last year and group pre-tax profits returned to the black, at £5.5m after exceptional items, up from losses of £11m last time.

Online sales grew by 14.1%, to account for 27% of total UK sales, while 71% of online sessions were over mobile devices – up from 59% last year. Click and collect accounted for 35% of all online orders, up from 32% last year.

However, not all the figures travelled in a positive direction. Total UK sales fell by 1.2% to £235.6m in the 28 weeks to October 11 as loss-making stores were closed, and underlying losses of £13.5m were a 9.4% improvement on last time. While international like-for-like sales were up by 4.9%, total international sales were down by 0.5% at £397.5m – but international profits improved by 0.4% to £25.3m. Overall, worldwide sales were down by 0.7% at £633.1m.

Mothercare’s future strategy now rests on six pillars: to become a digitally-led business, supported by a modern retail estate, and offering good quality products backed up by strong customer service. It also aims to increase profit margins, to operate as a lean organisation whilst also investing for the future, and expanding further internationally.

Chief executive Mark Newton-Jones, who took over the role in July, said the successful rights issue gave the retailer the “financial resources and flexibility to implement our strategy.” He added: “Whilst it is still early days the results, this morning, show some improvement. In the UK, we have made progress towards re-establishing ourselves as a full-price retailer. For this approach to be sustainable, we must continue to improve our style, quality, design and innovation in product while modernising our presentation both online and in store.”

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