13th Jan 12
Mothercare reports 3% sales drop
by Paul Russell
Nuturing: mother and baby shop needs helping hand at home
Nuturing: mother and baby shop needs helping hand at home
Embattled retailer Mothercare announced another sales decline in the UK, as it continues to struggle at home but flourish overseas.
The babies and children’s specialist retailer, which has roughly 350 shops in the UK, revealed that its domestic market like-for-like sales had fallen by three per cent during the 13 weeks ending 7 January.
The figure is an improvement on the decrease of seven per cent reported last August and included a rise of five per cent in December, although the performance was boosted by comparisons with the previous Christmas, when the country endured an extremely cold snap.
Total global sales had declined by 1.2 per cent despite an increase of three per cent in its worldwide network. The retailer currently has 1,000 stores located overseas. The update comes on the back of a poor 2011 for the company, which saw its position in the UK retail market under review following half-year losses of over £80m and the exit of former chief executive Ben Gordon.
Alan parker, the executive chairman, said that the improved like-for-like sales performance in the UK was achieved in an ever more competitive consumer environment. He added that additional promotional activity helped drive a like-for-like sales rise of five per cent in December.
No additional store closures are planned although Mr Parker, who is temporarily running the retailer following the departure of Mr Gordon, said that nothing was ruled in or out. He plans to complete the review during the current quarter.
The figures, however, were better than anticipated, resulting in shares rising by two per cent, but Seymour Pierce retail analyst Freddie George said that much will depend on the retail review which Mr Parker is carrying out. He said that from the early suggestions it appears as though the review will focus on bettering the value in the UK, digital and service proposition, as well as cost cutting.
Mr George went on to say that they suspect the review will not be enough to differentiate the British business from its peers. He explained that they feel it is not an option to compete on price as Mothercare’s products have been commoditised by the supermarkets and online. He added that improving service is just part of the solution because they believe the business in the UK must reinvent itself.
Founded by Selim Zilkha, an Iraqi-born entrepreneur, the retailer’s first outlet was launched in 1961 in Surrey, with it floating on the stock market by 1972. It remains one of the British high street’s most recognised brands but, in recent times, the company’s presence in emerging Middle Eastern and African markets has seen its global business outperform its British arm.
In recent months shops have opened in Iraq, Morocco, Chile and Colombia, bringing the total figure outside the British Isles to 1,000.
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