15th Jan 2015 08:10
LONDON (Alliance News) - Mother and baby retailer Mothercare PLC Thursday reported further strong growth in its international operations in its fiscal third quarter, while its struggling UK business moved to protect margins over the key Christmas period by delaying its end-of-season sale until Boxing Day.
Mothercare is shrinking its UK business after it was hit hard by tough competition in the sector, a lack of customer satisfaction with the services in its stores, and the company's relative slowness in making its online operations competitive. It suffered a torrid time over Christmas 2013, warning last January that its results in the year to end-March would be below market expectations after heavy discounting in its sectors over Christmas period hit sales and profits. That led directly to the departure of former Chief Executive Simon Calver.
Determined not to make the same mistake this year, Mothercare held back on discounting. It said total sales in the UK fell 1.9% on the year in the 13 weeks to January 10, despite a 4.9% cut in selling space, while like-for-like sales rose 1.1%.
Crucially, it said its UK gross margin had continued to stabilise over the period as it sold more stock at full price, delaying its end-of-season sale until Boxing Day. It said its end-of-season sale stock was also 16% lower than last year, and its sell-through rate was up 13% on the year.
Mothercare said UK online sales rose 16.1%, and now represent 31.8% of total UK sales, up from 26.9% last year. Click-and-collect orders rose 10.7%.
Whilst attempting to return its UK business to growth, Mothercare has been expanding internationally. It said international sales were up 14.4% at constant currencies, driven by an 11.5% increase in sales space. However, the sale growth was only 5.4% at actual currencies, as exchange rate movements went against it.
Its total group sales for the 41 weeks to January 10 are down 1.6% on the year earlier period, with total UK sales down 1.4% and international sales at actual currencies up 1.3%. UK like-for-like sales are up 1.3% over this longer period.
By Steve McGrath; [email protected]; @stevemcgrath1
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