Parents face Brexit hit as Mothercare warns over clothing price hikes

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Parents are set to be the latest to suffer from the Brexit-hit pound after Mothercare warned over price hikes for baby clothes.

The retailer said prices are expected to rise by between 3% and 5% from the middle of next year as it faces surging costs after the pound's plunge since the vote to leave the EU.

Clothing and footwear will take the brunt of the price rises as Mothercare buys most of its ranges in US dollars from suppliers in the Far East and India.

The blow to mothers and fathers comes after the pound slumped to 31-year lows against the dollar following the EU referendum.

A raft of retailers have warned over price rises since the Brexit vote, including high street giant Next.

Mark Newton-Jones, chief executive of Mothercare, told the Press Association the slump in the value of the pound against the dollar has had a "big impact".

He added: "We are working very hard... to take down that cost."

He said the group had negotiated with suppliers to reduce the price impact by a third, while the company itself will take on around a third of the extra costs, with the rest passed on to customers.

His warnings came as Mothercare revealed it slumped to a loss after suffering a "difficult" first half as sales were knocked by poor weather and a warehouse overhaul.

Shares in the group fell 4% as it posted a bottom-line loss of £800,000 in the six months to October 28 against profits of £5.8 million a year earlier, with like-for-like UK sales falling by 0.7%.

On an underlying basis, pre-tax profits fell 15.7% to £5.9 million.

It marks a setback after Mothercare reported its first annual profit for five years in May.

But Mr Newton-Jones said sales have returned to growth and insisted the first half woes were a "bump in the road" as he continues with a plan to turn around the business.

He is in the second year of an overhaul, which is closing a quarter of shops and shifting focus to out-of-town stores rather than high street locations, as well as online trade.

Mothercare closed six stores in the first half and has refurbished around 60% of its shops.

Mr Newton-Jones said the group aims to be left with around 160 stores, but added its estate is "constantly under review".

Mothercare saw underlying half-year losses widen for the UK business, to £8.8 million from £6.1 million a year ago.

Its international business - which accounts for more than two-thirds of group revenues - saw sales nudged higher by the Brexit-hit pound, up 7.1% to £399.9 million.

But with the boost from the plunging pound stripped out, overseas sales fell 0.8% and were 2.9% down on a like-for-like basis.

This left underlying profits down 4.1% at £20.8 million for the international arm.