13th Oct 11
Mothercare boss departs following sales slump
by Adam Richards
Next steps: Mothercare boss bears the blame for bad sales
Next steps: Mothercare boss bears the blame for bad sales
The spending slump on the high street has led to the departure of the chief executive of Mothercare, Ben Gordon, just a week after the retailer’s shares tumbled on the back of a profit warning.
Gordon, who has spent nine years at Mothercare, successfully expanded operations abroad, but the UK business has underperformed and dozens of stores in town centres have been closed down. A statement from the retailer’s board, fronted by Alan Parker, said that Gordon will be departing by mutual consent in November, when he will head for the exit doors with a payoff of £600,000 – equal to one year’s salary.
Mothercare, which boasts 353 stores in the UK, has found times hard as the country’s biggest supermarkets introduced mother-and-baby products. Although the company has a large business abroad, the UK operations deliver the majority of the profits.
However, Gordon revealed last week that profit margins had been impacted by a discounting trend and that hard-up consumers were trading down on big-ticket items like pushchairs. The profit warning was the retailer’s third in just a year.
Gordon’s departure arrives during a high street spending slump which has seen a number of specialist retailers, such as Game, HMV and Mothercare, squeezed between cheaper online outlets and price-cutting supermarkets. Last week he said that the retailer had experienced a drop in consumer confidence on the back of the riots, and that trading has deteriorated even further over the last four weeks.
Gordon explained that underlying economic malaise was the real issue, saying that customers aren’t spending the amounts they previously were. The company said hard-up parents were purchasing cheaper prams, car seats and buggies, and that clothing sales had started to tail off.
However, Gordon believes Mothercare can recover. He said that during his nine years in the chief executive role he has overseen considerable changes in the group, adding that Mothercare has massive potential. Parker replaced Ian Peacock as the retailer’s chairman in the summer. After Gordon’s exit the management will report to him, while the board is already seeking out a new chief executive.
Mothercare, which caters for expectant mothers as well as offering general merchandise for kids up to the age of eight, was founded in 1961 by entrepreneur Selim Zilkha before floating on the stock exchange in 1972. It later became a major fixture on the UK’s high streets and extended its footprint upon acquiring the Early Learning Centre for £85m in 2007.
News of Gordon’s departure resulted in the shares going up by 14 per cent at one stage as investors speculated that the company could embark on a major overhaul to boost profits. Analysts claimed Gordon paid the price for the profit warning last week, which revealed a like-for-like sales slump in the UK of 9.6 per cent during the 12 weeks ending 1 October.
Our Stories
- Sandwich labels misleading shoppers
- Unemployment drops unexpectedly but worse still to come
- Tesco store managers see annual bonuses cut
- Royal Mail: half London sorting office to be sold
- Panasonic announces £3.4bn loss
- Thomas Cook attacks government over holidays at home promotion
- Clinton Cards falls into administration
- Wet April sees high street spending fall
- Five tough years ahead for UK jobs market
- Deal struck to save Thomas Cook
- Discount battle leads to sales decline at Morrisons
- Wetherspoon founder: pubs plans to be hit by taxes
Popular Topics
afghanistan al qaeda amazon Apple ASDA bank of england barack obama BBC british airways china david cameron Debenhams Egypt facebook george osborne Google India ipad iphone ivory coast japan Libya London M&S Marks & Spencer Morrisons nhs North Korea Office for National Statistics pakistan protests russia Sainsbury’s South Korea terrorism Tesco Tunisia UK UK retailers UK retail news UK shopping us Waitrose Wikileaks x factorArchive
- May 2012
- April 2012
- March 2012
- February 2012
- January 2012
- December 2011
- November 2011
- October 2011
- September 2011
- August 2011
- July 2011
- June 2011
- May 2011
- April 2011
- March 2011
- February 2011
- January 2011
- December 2010
- November 2010
- October 2010
- September 2010
- August 2010
- July 2010
- June 2010
- May 2010
- April 2010
- March 2010
- February 2010
- January 2010
- December 2009
- November 2009
- October 2009
- September 2009
- August 2009
- July 2009
- June 2009
- May 2009
- April 2009
- March 2009
- January 2009
