17th Oct 2013 07:50
LONDON (Alliance News) - Mother and baby product retailer Mothercare PLC Thursday reported lower sales for its fiscal second quarter and warned that heavy discounting in the sector in the UK was continuing to weigh on profit margins, although it grew international sales as it added to its network of shops.
The company, which also runs Early Learning Centres, has been contracting in the UK, closing less profitable stores in response to a highly competitive market that is full of product sales and promotional activity. It has been growing its international operations to try and offset the weakness in its home market.
Overall sales in the 13 weeks to October 12 were down 0.5%, with UK like-for-like sales down a further 1.9% which more than offset a 12.4% rise in international sales and 8.3% growth in UK online sales. For the half year, total UK sales were down 7.5%, with like-for-like sales down 1.4%, while international sales were up 13.3%.
Mothercare shut another five UK stores in its second quarter, reducing total space by 6%, but grew its international retail space 11.9% to 2.5 million square feet. In total, it now has 1,393 stores in 60 markets.
"The UK market in Home and Travel remained highly promotional and Autumn/Winter Clothing faced the same warm weather challenges as the rest of the sector but is gaining market share," Chief Executive Simon Calver said in a statement. "Whilst this has resulted in a margin environment that is more challenging than expected, we continue to focus on profitable sales and cash margin."
Mothercare shares were down 3.8% at 378 pence Thursday morning.
By Steve McGrath; [email protected]; @stevemcgrath1
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