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Mothercare warns on profits as it reports falling online and store sales

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Mothercare today reported falling online and store sales over the Christmas period in what it said was a reflection of ongoing changes in consumer behaviour. It warned that full-year profits would be down.

The nursery and baby equipment retailer reported online sales down by 6.9% in the 12 weeks to December 30, while like-for-like sales were down by 7.2%. Some 42% of sales took place online during the period. The figures continue trends seen in first-half results at the retailer, a Leading trader in IRUK Top500 research and, Mothercare said today, reflects continuing consumer trends that it flagged up in half-year results. At the time it said lower footfall and spending were hitting its core UK market. International trade fell by 6.8% but, said Mothercare, showed signs of improvement at the end of the period, with online sales growing by 8.5% in constant currency and 7.4% in actual currency.

Chief executive Mark Newton-Jones said: “In our UK business, we took a conscious decision to remain at full price to protect our brand positioning prior to Christmas but to then discount more heavily in the end-of-season sale. We have subsequently seen good progress with strong sell-through rates on Autumn/Winter clearance lines albeit these carry lower margins and will lead to a further reduction in full year margin as a result.”

He said the focus would be on controlling both stock and capital expenditure. That comes against the backdrop of a retail environment that was not expected to change significantly.

“Going forward, we are not anticipating any improvement in the short-term market conditions for the UK and on this basis the adjusted group profit for the year is likely to be in the range of £1 to £5m,” said Newton-Jones. “Whilst the performance of the business has been challenging in the last few months, we remain singularly focussed on transforming Mothercare to be the leading global retailer for parents and young children.”

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