Mothercare returns to growth

The group, which operates 203 Mothercare and 77 Early Learning Centres in the UK, said like-for-like store sales rose 0.3 per cent in the 13 weeks to October 13, compared with a 6.7 per cent slump in the first quarter, while online sales also returned to growth.

Chief executive Simon Calver said the chain’s value ranges performed strongly, as well as the Little Bird clothing range from Jools Oliver, wife of TV chef Jamie Oliver.

The babycare firm, which slumped to a £103m loss in the year to March, closed 31 stores in the first six months as part of its cost-cutting plan, against its target of around 50 closures for the whole year.

The wider group, which operates 1,098 international stores, saw total sales decline 7.5 per cent as the impact of the UK store closures offset 10.8 per cent growth overseas.

After a difficult period, the company has recently sounded more optimistic, as it moves to reduce UK store numbers from 311 to 200 by 2015.

The new UK estate will comprise 95 out-of-town sites and 105 high street locations, while the closures should improve UK profitability by £13m by March 2015.

The trading update came as research revealed that retail chains are shutting shops at a rate of more than 30 a day across the UK.

Direct in Home, the group’s website, grew 11 per cent in the second quarter following a recent revamp under the turnaround plans.

Mothercare predicted further growth overseas based on its forward order book and store opening plans.

Asia Pacific and the Middle East & Africa continued to perform strongly in the period while the eurozone crisis has hit its European markets.

The company opened a net 70 stores overseas during the first half of the year and is on track to meet its goal of 150 stores for the whole year.

Matthew McEachran, analyst at N+1 Singer, said while there has been improvement in the UK he believes the promotional market may have weighed on Mothercare’s profit margins.

Mr McEachran said: “International, which is the engine for profits whilst the UK is making losses, is behind plan due to foreign exchange and the eurozone.”

He added: “Mothercare always had one of the most advanced global growth strategies but heavy losses in the core UK business reflect a lack of domestic focus by previous management.”