Strict discounting leads Mothercare to modest sales growth

By Jennifer Faull | Deputy Editor

April 16, 2015 | 3 min read

Reducing promotional and discount activity has led to modest fourth-quarter sales growth for Mothercare, ending a turbulent year which saw it issue a profit warning and a proposed takeover bid by Destination Maternity fall through.

For the 11 weeks to 28 March 2015 Mothercare's UK sales rise 1.5 per cent, with like-for-like sales up 5.1 per cent.

Online drove a considerable portion of this growth, equating to 30 per cent of total UK sales, while mobile sales similarly grew 31 per cent.

Internationally, currency headwinds limited sales growth to 5.5 per cent on an actual currency basis versus 11.4 per cent at constant currency.

Mark Newton-Jones, chief executive officer of Mothercare said the results were in line with expectations.

“In the UK our strategy of reducing promotional and discount activity and returning to being a full price retailer has continued to stabilise margin,” he said.

“By restricting discount periods we produced a stronger end of season sale with improved sell through rates as a result. Like-for-like and online sales have also benefitted from this approach along with the initiatives to improve product and service put in place during the year.”

Newton-Jones only joined the retailer last March after former chief executive, Simon Calver, stepped down in light of a profit warning issued to investors. The management shake-up continued with the resignation of chief financial officer Matt Smith shortly after.

It came at a time when Mothercare was courting a proposed takeover by Destination Maternity. The US company offered £266m for the struggling chain, however it was rejected by Mothercare bosses for being too low.

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In the second half of the year Mothercare embarked on a turnaround strategy and launched a rights issue to raise around £100m to transform itself into digitally-led business.

"Over the last year, we have made good progress with our strategic plan,” continued Newton-Jones. “It is still early days in our turnaround, but we are putting the foundations in place by modernising and investing in our business.”

"Our vision remains clear - to be the leading global retailer for parents and young children.”

Mothercare will announced its full year results on Thursday 21 May.


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