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Mothercare starts to turn around as online sales show early signs of improvement

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Mothercare says it is seeing the early signs of a turnaround in its UK business as its online sales start to improve.

The multichannel nursery retailer said that while its UK direct sales were down by 1.8% at £60.9m in the first half of its financial year, compared to £62m in the same period last year, online sales had begun to grow following the launch of its new website. The first focus of its turnaround programme has been on Direct at Home sales – ordering online for home delivery. There sales were up by 0.9% to £43m following the May launch of its new website, from £42.6m last time.

Attention is now set to turn to its Direct in Store business, where orders are made online for in-store collection. Sales at this part of the business fell by 7.7% to £17.9m in the half-year. Improvements will include next-day collection of orders. “Our store network, which offers national coverage, is at the heart of our multichannel strategy of offering customers the ability to shop the way that is most convenient to them,” said chief executive Simon Calver.

Other priorities in the UK turnaround will include, said Calver, responding to customers’ demands for value and for better service, being driven through an in-store customer satisfaction survey. “Our customers have been candid about what we need to do,” said Calver, “and although we have a long way to go, we have started the journey towards improving customer satisfaction.”

In the half-year to October 13, worldwide network sales rose by 2.1% to £636.8m but total group sales were down by 5.9% and UK sales were down by 3.4%, showing an improvement on the 7% sales fall reported at this time last year. Underlying pre-tax losses narrowed to £0.6m from a £4.4m loss last time, though exceptional costs of £26.8m related to store closures and a write down on its Australian business, now set to be sold, took the bottom line pre-tax loss to £27.4m.

Calver said: “In the UK we have taken the first steps towards stemming the losses and are confident that we are on the right path towards delivering our plan.”

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