10th Apr 2014 08:44
LONDON (Alliance News) - Mother and baby products retailer Mothercare PLC Thursday said sales rose in the last quarter of its financial year, as it stemmed the rate of decline in UK sales, and said it expects its underlying profit for the year as a whole to be in line with current forecasts.
Although total group sales for the year were still down 2.6%, it was a marked improvement from the 6% decline in group sales in reported a year earlier.
Mothercare shares rose 13% at 184.50 pence per share early Thursday, having touched 191.49 pence after the open.
"After a difficult third quarter, it is encouraging to note that we have seen some improvement in trading for both International and the UK," said Chairman Alan Parker in a statement.
The mother and baby product retailer has been struggling in the UK for several years as a result of the economic downturn and due to increased competition from online competitors. It has been restructuring in the UK, closing down unprofitable stores, while also expanding into international markets.
In January, Mothercare had warned that its results in the year to end-March would be below market expectations after heavy discounting in its sectors over the key Christmas period hit sales and profits.
Last month Mothercare appointed Mark Newton-Jones as interim chief executive, after former Chief Executive Officer Simon Calver stood down with immediate effect February 24, a move that came just over a month after the company issued a profit warning in the wake of tough Christmas trading.
Mothercare said Thursday that worldwide network sales were down 2.5% in the 12 weeks to March 29, although group reported sales were up 0.6%.
It said that total UK sales fell by 4% in the fourth quarter, and were down 7.5% for the year as a whole. While UK sales continue to decline, they have improved from a 9.2% decline for the full year the prior year. On a like-for-like basis, it said that UK sales were down 1.9% for the 52 weeks to March 29, compared with a like-for-like decline of 3.6% the prior year.
"UK like-for-like sales and margins are in line with expectations for the quarter, despite continued pricing pressure in Home and Travel," said Parker.
Internationally, retail sales rose 9.8% in the fourth quarter on a constant currency basis, but declined 1.8% at actual exchange rates, as international sales were hit by an increasing level of currency devaluation, Mothercare said.
During the year, the retailer continued to streamline its UK retail operations by closing loss-making stores in the UK but expanding internationally. Mothercare currently operates from 4.4 million square feet, a 5.8% increase year-on-year, and has 1,441 stores across 60 markets worldwide.
"In the UK, we expect the environment to remain competitive and promotional. In International, we expect the effects of currency devaluation to continue into the new financial year," the company said in a statement.
Mothercare also has been focusing on its online business. It said that 29% of the sales mix in the fourth quarter, up from 25% in the previous year, was attributable to its Mothercare Direct business.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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