Mothercare sales slump as markets remain "challenging"

Retailer Mothercare has revealed UK sales tumbled 8.8% in its fourth quarter and warned that trading conditions are set to remain “challenging”.

The babycare chain said the like-for-like sales fall in the three months to 30 March marked an improvement on the previous two quarters, but the result was boosted by clearance promotions from shop closures.

It added that the clearance sales had “significantly” hit online sales. Shares fell 7% after the figures.

Mothercare also revealed total UK sales tumbled 14.5% in the quarter after Mothercare swung the axe on 40 stores over the past three months.

The group said it had now completed its store closure programme ahead of schedule, leaving it with 80 shops, down from 137 a year ago – a 30% reduction.

Mothercare chief executive Mark Newton-Jones said: “Whilst this has been a difficult but necessary process, to right-size the UK, it has meant that we have had to say goodbye to many loyal and longstanding colleagues.”

He insisted the “disruption we have seen from both the organisational changes and the UK store closures is now largely behind us”.

He added: “Looking ahead, we expect market conditions in the UK and in some international markets to remain challenging.”

The group is also bracing for a continued impact from the large amount of cut-price clearance stock being sold in recent months.

But Newton-Jones said: “We enter the new financial year in a more robust position as a restructured business fit for the future.”

The update showed that international sales fell 4.9% in constant currencies.

Group-wide sales were 8.8% lower overall in the quarter, leaving worldwide sales 9.6% down for the full year.

The figures come after Mothercare recently agreed a £13.5 million sale of its Early Learning Centre business to toy chain The Entertainer in a move to help slash its debt pile.

Retail expert Clive Black, at Shore Capital, said that, despite ongoing sales falls, he believed Mothercare management had brought the chain back from the brink.

“Mothercare is out of the surgical ward and heading for the calmer medical ward,” he said.

“To fulfil the change programme’s potential though, it needs to sustainably trade better and markets remain challenging.”