Mothercare boosts turnaround hopes

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Mother and baby products retailer Mothercare boosted its turnaround hopes today as it announced a 61 per cent rise in underlying profits to £9.5m.

Shares rose 18 per cent after the figure beat expectations and it disclosed it had been given more breathing space by its lenders with extended borrowing facilities of £100m.

The UK business reported a slightly smaller underlying loss of £21.5m as like-for-like sales fell by 1.9 per cent in the year to March 29 - an improving trend on the 3.6 per cent decline in the previous period.

Web sales grew with click-and-collect representing a third of online orders and mobile devices accounting for 35 per cent of internet traffic.

Chairman Alan Parker painted a brighter picture on current trading after a disappointing end to 2013 followed by a recovery in the first three months of this year.

He said: “This momentum has been maintained into this quarter, and we look forward to sustaining this improvement in the new financial year.

“Underlying group profits are up on last year, but there is a lot more to do.”

Mr Parker said the search for a new chief executive was “progressing well” - following the resignation of Simon Calver in February, six weeks after the company issued a profits warning due to poor Christmas trading in the UK.

During the year, Mothercare closed 35 loss-making stores in the country - seven Mothercare outlets and 28 Early Learning Centres.

Mr Parker said: “We are determined to achieve our goal of returning the UK to profitability, growing our international business and building shareholder value over the long term.”

Overseas earnings grew 7.6 per cent to £45.3m, with like-for-like sales up 2.5 per cent, though the group was hit with £14.9m in foreign currency adjustments.

Analysts at Numis said there was “clear value” in the shares.