Mothercare losses deepen as sales continue to slide

Mothercare has been hit by a further slide in sales at home and in its overseas operations after putting its UK business into administration last month with the potential loss of 2,800 jobs.

Group sales fell 8.4% to £452.3m in the six months to 12 October, as pretax losses widened to £21.2m from £18.5m in the same period a year before.

Mark Newton-Jones, the chief executive of the mother and baby goods retailer, said it had been through an “extraordinarily challenging period” but the exit from the UK, where it had 79 stores, enabled the group to focus on expanding its international operations.

He said the move completed Mothercare’s transformation “into a capital-light business, which is expected to be both cash generative and profitable”.

“We are confident in the future of the Mothercare brand. We believe that, without the financial and management burden of running a UK retail operation, we can singularly focus Mothercare on its global international franchise,” Newton-Jones said.

However, the half-year figures showed a 5.7% slide in sales at Mothercare’s established overseas stores, while pretax profits slipped 21% to £12.2m. It closed a net 45 overseas stores, taking the total to 965.

Mothercare said it had experienced difficult trading in the Middle East and China but continued to enjoy strong growth in its key markets of India, Indonesia and Russia.

The company said it was also in discussions about establishing a franchise deal for Mothercare in the UK and would make an announcement in due course.

Last year the retailer said it had been forced to flag “material uncertainty” that the group would remain a going concern because of the possibility of more significant and prolonged decline in trading. But Mothercare said it now believed it had sufficient cash to meet all its contractual financial commitments for the year.