Mothercare’s annual losses widened and sales tumbled in its last financial year as the shutting of more than 40% of its UK stores led to a loss of confidence among consumers and suppliers.
The struggling baby and maternity chain, which has cut its number of UK stores from 134 to 79, made a pre-tax loss of £87.3m in the 53 weeks to the end of March, compared with £72.8m in the previous year.
The retailer said its store closure programme “led to concerns about buying our products … the worry being the Mothercare business may not survive. With more time we believe that the UK customers’ confidence in our brand will be restored.”
Mothercare’s UK operation reported a £36m loss as total UK sales fell 11.8% to £336m. Like-for-like sales – those at stores open for more than a year – fell 8.9%.
Mark Newton-Jones, the chief executive, said the “primary focus” in the UK will be developing online sales, which fell 8% to £140m in its last year, as well as offering customers more credit options and exclusive products.
“While this major restructuring activity has resulted in significant headline losses for the year, the business is now on a sounder financial footing,” Newton-Jones said. “The next phase of our strategic transformation plan is to develop Mothercare as a global brand, maximising the opportunities we see across many international markets.”
He said the company’s finances were helped by the sale of the Early Learning Centre to rival chain The Entertainer for £11.5m, and the sale and leaseback of its Watford head office for £14.5m.
This has helped Mothercare reduce net debt from £44m to £6.9m.
Mothercare’s share price was up 12% at 23p in early trading as the company said its outlook was more positive, citing a “moderate recovery” in its international business and “some improving UK trends”.
Newton-Jones said: “We have achieved a huge amount this year, refinancing, restructuring and reorganising Mothercare to ensure a sustainable future for the business. The majority of that work is now done, including the completion of our store closure programme, leaving us with 79 stores which are well positioned to support our UK customer base.”
