News Column

Mothercare 15-Week Group Sales Drop As New CEO Takes The Reins

July 17, 2014

Alice Attwood



LONDON (Alliance News) - Mothercare PLC saw its shares drop Thursday morning after the company said group sales declined as cash margins improved as its new Chief Executive outlined his plans to modernise the business.


Shares in the UK-based mother and baby retailer plummeted to the bottom of the main market Thursday morning, trading 8.41% lower at 256.00 pence per share.


In an interim management statement for the 15 week period to July 12, 2014Mothercare said group sales were down 1.8% and logged a 0.2% rise in worldwide network sales.


In the UK, like-for-like retail sales were up 0.9%, with the company noting that the decline in UK sales is in line with its space reduction plans and that reduced discount activity in the UK has led to lower sales online at better cash margins, which was in line with expectations.


"We are taking a different approach to the business, by moving away from aggressive discounting and concentrating on full price sales. This has impacted online sales where most discounting has traditionally taken place," said the company.


On an international basis, retail space rose 13.3% during the period and constant currency sales were up 14.7%. Mothercare said that, as anticipated, currency devaluation has hit reported retail sales.


Global retail space rose 7.1% year-on-year to 4.5 million square feet, growing to 1,476 stores in 60 countries.


New CEO Mark Newton-Jones joined the business Thursday and outlined his plans for the mother and baby retailer's transformation. "In the UK, my early observation is that the business needs modernising and requires investment in its infrastructure, its stores and its Head Office systems. As a result many of the retail practices need updating, when we compare ourselves to more modern retailers. However, in spite of this, we still have high levels of customer loyalty and two great brand names in Mothercare and Early Learning Centre."


In a statement Newton-Jones said that the company will initially concentrate on four themes to "fix the basics;" cost reduction and cash generation, rebuild gross margins, improve service both online and in store and product improvement.


"His business transformation expertise gives me confidence that we will achieve our plan to turnaround the UK business and continue our strong international growth," said Alan Parker, Chairman of Mothercare Thursday.


At the beginning of July the UK-based mother and baby products retailer said it had rejected two takeover offers from US-based maternity apparel retailer Destination Maternity Corp, the last worth about GBP266 million, because it felt they undervalued the company.








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Source: Alliance News


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