Mothercare cautious as quarterly sales fall

The company, which has 1,115 stores in 52 countries but makes about three quarters of its revenues in Britain, said sales at UK stores open at least a year fell 4.1 per cent in the 15 weeks to July 10. Including VAT the decline was 2.8 per cent.

Analysts had expected a fall similar to the 1.6 per cent reported in the fourth quarter of last financial year, though they also noted that comparable figures from the year before had become tougher.

"In the UK we continue to plan cautiously for the remainder of this year," said chairman Ian Peacock.

"In this context, we expect to invest further margin in our customer offer which will be offset, in part, by cost savings and our property restructure."

Retailers are worried that steps to cut government borrowing, such as higher taxes and public spending cuts, will hit consumer demand in the months ahead.

Mothercare said international sales rose 20.3 per cent, led by eastern Europe, the Middle East and Asia, ensuring group sales climbed 0.4 per cent.

The group also said it had agreed to buy maternity-wear brand Blooming Marvellous for an undisclosed sum.

Blooming Marvellous - which caters for mums-to-be who want fashionable maternity wear as well as offering a range of clothes and toys - was founded in 1983 as a mail order company.

Mothercare chief executive Ben Gordon plans to develop the brand within the business before eventually rolling out the Blooming Marvellous ranges across its stores.