Published: Mon, January 08, 2018
Business | By Tara Barton

Mothercare's United Kingdom sales dip, sees no improvement soon

Mothercare's United Kingdom sales dip, sees no improvement soon

"International trade was challenging in the quarter overall, but we have seen a return to moderate growth in the Middle East over the last seven weeks".

Mothercare said adjusted group profit for the year ending March was likely to be in the range of 1 million pounds to 5 million pounds ($1.35 million-$6.77 million), sharply lower than the 10 million pounds it previously expected.

Mark Newton-Jones, chief executive of Mothercare, said: "As we signalled in November, there has been a softening in the United Kingdom market, with lower footfall and website traffic resulting in lower spend in both stores and online".

At home, where Mothercare has cut nearly a tenth of its shop floor space in the last quarter, Newton-Jones said Mothercare had taken the "conscious decision" not to discount on the run-up to Christmas, instead of reducing prices in the firm's end of season sale. Total sales were down 11% year-on-year after store closures, and gross margins also fell due to higher discounting. It now has 143 stores in the United Kingdom, of which four are Early Learning Centres. In the year to date, sales are down 4.5% in the UK.

Worldwide retail sales were down 3.0% at constant currency and 6.8% in actual currency, though Mothercare said key markets were showing signs of improvement towards the end of the period.

Department store chain John Lewis reported an 8.9 percent jump in total sales in Christmas week with big increases from fashion, homeware and home technology categories.

However, key markets were showing "signs of improvement", with a return to moderate growth in the Middle East and Russian Federation.

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Neil Wilson, senior market analyst at ETX Capital, told the BBC that the decision not to cut prices was a mistake.

Other major retailers have already indicated that they are feeling the strain.

Mothercare, which sells maternity wear and children's clothing and equipment, has issued a profits warning after a disappointing Christmas.

It subsequently emerged that rival chain House of Fraser was seeking to reduce rents on some of its stores, suggesting that it too was struggling.

British retailers are giving updates on the key Christmas trading period stretching from "Black Friday" on November 24 to clearance sales in early January.

At the same time, data from credit card firm Visa has indicated that annual consumer spending fell by 0.3% year-on-year during 2017, marking the first annual decline since 2012.

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