Retail: Mothercare turnaround plan make progress

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Baby goods retailer Mothercare more than doubled its half-year profit on strong UK margin growth as the turnaround plan for its troubled British business made progress.

Underlying profit before tax rose 112 per cent to £7m in the six months to October 10, the firm said.

Mark Newton-Jones, chief executive of Mothercare, said: “We are a year into our turnaround; making good progress against each of our strategic pillars and as a result underlying profits for the first half have more than doubled.

“Our work to return the UK business to profitability continues to pay off, with growth in both gross margins and like-for-like sales. Improved product architecture, better buying and a focus on full price retailing helped drive the stronger margin growth.”

Mr Newton-Jones added that Mothercare’s new store format was going down well with customers and that these refurbished stores are delivering encouraging uplifts in both sales and profit.

Sales at UK stores open over a year rose 3.8 per cent, it said, with total UK sales up 0.4 per cent to £236.6m. The division more than halved its loss to £6.1m.

But underlying profit for its international business fell 14.2 per cent to £21.7m on adverse currency moves, Mothercare said.

Mr Newton-Jones said: “We continue to lay the foundations for future growth in our International business. Despite increased economic and currency headwinds in a number of our markets, impacting both sales and profits, we and our franchise partners remain confident in the business model and together continued to grow space. We expect the challenging environment to continue into the second half.”