Mothercare turns in losses of more than £80m

The group, which has 353 UK stores and 969 overseas, has already announced it is cutting 110 UK stores but yesterday said it would look to adjust the size and shape of its business in line with current conditions.

No further store closures are planned at the moment but executive chairman Alan Parker, who is running the company following last month’s departure of chief executive Ben Gordon, said “nothing was ruled in or ruled out”.

A dire trading performance and the lower value of the Early Learning Centre on the company’s books dragged it to a loss of £81.4m in the 28 weeks to October 8, compared with profits of £300,000 the previous year.

Like-for-like sales in its stores in the UK slumped seven per cent over the half-year as consumers slashed spending on more expensive items. It expects more “difficult” trading conditions over the key Christmas trading period.

Ben Hunt, analyst at Oriel Securities, said last week the company should consider winding down the UK arm completely.

He said: “Closing the UK business may seem like a radical idea, but people clearly fear the loss-making UK business will continue to be a burden on the company.”

However, Mr Parker said he believes the UK business “has the potential to be a great success story waiting to happen”.

He added: “I don’t rule out closing stores but I don’t rule out opening them either.”

He said the review would look at getting the UK business’s operating cost base right and in particular would look at its delivery and online businesses, which have been “disappointing”.

The UK business, which currently operates 352 stores, made an operating loss of £18.5m compared to profits of £2.8m a year ago.

Its profit margins fell four percentage points after it was forced to put on more discounts as consumers reined in spending.

Sales of its clothing ranges were hit by the warm weather in September, which caused it to slash prices to clear its stock.

The poor performance in the UK overshadowed a 15.7 per cent rise in sales to £338.3m at Mothercare’s 975 stores in 55 overseas countries.

The company slashed its dividend payment to shareholders to 2p from 6.4p per share.