Mothercare warns of flat profits as 'fragile' consumer confidence hits sales

Struggling British baby products retailer Mothercare has told investors that profits will not show any growth this year after it was hit by "fragile" consumer confidence.

Mothercare sells baby clothes and equipment

The company said total sales fell 9 per cent in the 15 weeks to July 15, as it struggled amid an "uncertain and volatile" market.

The firm has closed more than 50 of its UK stores over the past year in a bid to keep it afloat and improve profitability.

Sign up to our Business newsletter

Sign up to our Business newsletter

Mothercare's UK sales were decimated by the raft of closures, driving total UK sales down by 23 per cent compared with the same period last year.

The retailer's UK store estate has fallen to 79 shops from 134 shops at this time in 2018.

Like-for-like sales improved, rising by 3.2 per cent as it grew stronger at the end of the quarter, but online sales fell 12 per cent.

Last year, Mothercare posted headline losses of £87m as it was weighed down by the cost of its restructuring plan, which included a company voluntary arrangement (CVA).

It said it has continued to make progress through the turnaround, although it has seen a slower recovery in UK profit margin than anticipated because of the difficult retail backdrop and the need for promotional spend.

Mark Newton-Jones, chief executive of Mothercare, said: "We have continued to make good strategic progress in the first quarter in our transformation to deliver a sustainable and profitable future for the Mothercare brand.

"The UK retail market remains challenging and though the rate of decline in like-for-like sales has moderated, margin investment in promotional activity has been necessary to stimulate sales, both in our stores and online.

"Our immediate priority is to complete the transformation of the business with a near-term focus on evolving and optimising the ownership, structure and model for our UK retail operations as an independent franchise."

The group also announced earlier this year that it had agreed to sell the Early Learning Centre to The Entertainer for up to £13.5m, with the proceeds being used to reduce debt.