Over the last year Mothercare has cut its UK store numbers from 134 to 79 – closing 41% of its stores. Its approach of using a CVA (company voluntary agreement) to cut store numbers is one that’s also been adopted by a number of multichannel retailers that have found that they have more stores than perhaps they need in a time when shoppers are happy to make more of their purchases online. Now Mothercare, which sells to parents and carers of babies and young children, has shown what the result of the store reduction has been on its sales.
Mothercare said, in its first quarter trading statement, that overall sales in the 15 weeks to July 13 were down by 23.2% as a result of store closures that saw its offline selling space reduce by 29.9%. Online sales were also down, by 12.1%. This, said Mothercare, was partly down to the loss of in-store ordering through iPad sales in those stores that closed. But, it said, like-for-like sales, which strip out the effect of those store closures, and might now be expected to be ahead, were down by 3.2% on the same time last year. Sales improved towards the end of the quarter, thanks to a sale that cut the prices on surplus clothing stocks and toys, ahead of introducing a new range of toys from The Entertainer. In the second half of last year, Mothercare’s like-for-like sales were down by 11.1% year-on-year, while its total UK sales were 14.3% down.
The latest figures do, then, represent an improvement, though they came at the expense of heavy discounting. That means that although the sales decline has improved, those that have been made will be less profitable than had expected. Added to that, says Mothercare chief executive Mark Newton-Jones, the retailer also expected that it would see more sales from closed stores transfer to those that have stayed open – but that hasn’t happened as much as it expected.
Newton-Jones says there’s still work to be done. “Despite a difficult backdrop, we continue to improve ur customer offer and have launched a number of new initiatives including specialist sales and service training to all our store colleagues,” he said. “We have also launched an improved customer credit offer, both online and in-store. At an early stage we are observing increased basket sizes for those customers taking up this offer.”
He added: “The process of restructuring and rebuilding a sustainable business continues and we have in place financing plans to support these actions as we aim to be bank-debt free by the end of the year. Our immediate priority is to complete the transformation of the business with a near-term focus on evolving and optimising the ownership, structure and model for our UK retail operations as an independent franchise.”
Meanwhile, said Friday’s trading statement, Mothercare’s international sales are also down by 2.1% in the quarter, or by 4.5% when currency fluctuations are discounted. International space has grown by 5.6% at the same time.
Mothercare is ranked Leading in IRUK Top500 research.