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Published
Jul 18, 2013
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Mothercare's underlying UK sales fall again

By
Reuters
Published
Jul 18, 2013

BabyK by Myleen Klass at Mothercare


LONDON, England - British mother and baby products retailer Mothercare returned to an underlying sales fall in its home market in its latest quarter as the trading environment became increasingly promotional.

The company, which operates in 60 countries, said on Thursday sales at British stores open over a year fell 0.9 percent in the 15 weeks to July 13, its fiscal first quarter.

That compares with a flat like-for-like sales outcome in the fourth quarter of the 2012-13 year and with a very weak outcome in the same quarter last year when like-for-like sales slumped 6.7 percent.

"Whilst clothing sales and volumes have benefited from the launch of new ranges, especially the Value Essentials range in July last year, toys and home & travel in particular have been impacted by the increasingly promotional nature of the market," Mothercare said.

The first quarter outcome would have been worse were it not for a 14.6 percent rise in online sales.

Led by Chief Executive Simon Calver, Mothercare is in the second year of a three year turnaround plan aimed at revitalising a loss-making UK business worth 40 percent of group sales that has lost ground to rising competition from both supermarkets and online players.

The group is improving product ranges and delivery services. British stores are also being revamped and unprofitable ones closed - 56 were closed in 2012-13 and 13 in the first quarter of 2013-14, taking the UK total to 242.

Total UK sales fell 7.9 percent.

While Britain's retailers continue to find the going tough at a time when consumers' disposable incomes remain stretched, Mothercare's overseas arm has been more fruitful, with international retail sales up 11.3 percent in constant currency.

The group opened a net 47 stores overseas during the quarter, taking the total to 1,116.

"Trading conditions have been challenging both in the UK and across our Eurozone markets and are expected to remain so for the rest of the year," the firm added.

Shares in Mothercare, which have more than doubled over the last year, closed Wednesday at 473.5 pence, valuing the business at 420 million pounds ($637 million).

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