Mothercare Shares Fall as Turnaround Stumbles
Mothercare shares fell today, on the day the baby and materity retailer published its half year results.
The company’s underlying profit before tax for 28 weeks to 8 October 2016 was £5.9 million, a fall of 15.7% from £7 million in the first half of fiscal year 2016-17.
Like-for-like sale in its UK businesses were (0.7)% down, while non-comparitive UK sales were (2.3)% down. Underlying UK losses were minus £8.8 million.
Poor sales in the UK were blamed on unpredictable weather, which also led to necessary discounting eating into margins.
The retailer fared better aboard with an underlying profit for its foreign businesses of £20.8 million.
Exceptional charges, such as, upgrading its warehouse, refurbishing stores, closing stores and paying redundancy cost Mothercare £6.7 million. The company reported losses before tax of minus £800,000. In the same period last year, Mothercare report a pre-tax profit of £5.8 million.
The company now has a debt of £15.6 million, while last year there was still £27.2 million remaining from cash generated through a shareholder rights issue.
Mark Newton-Jones, Chief Executive of Mothercare plc, stated: “We are now in the second year of the turnaround of mothercare [yes, they now spell their brand name with the first letter in lower case in reports], and we are continuing to make major changes in the business. We have refurbished c60% of our UK store estate, upgraded our distribution and online capabilities and completed the bulk of the unprofitable store closure programme. Lastly we have seen a step change in our digital credentials with c40% of our business now being generated through this channel.”
At close, shares in Mothercare plc were 106.50 pence, down 4.48%.