Competition hurts Mothercare sales

MothercareBaby products retailer Mothercare has revealed UK sales have slipped back into the red as it lost out to rivals' cut-price deals.

The group saw UK like-for-like sales edge 0.9% lower in its first quarter to July 13, blaming an "increasingly promotional" market that hit demand for toys, home and travel products.
%VIRTUAL-SkimlinksPromo%Its performance marks a slight relapse after the group showed signs of halting sales declines in the previous quarter, when like-for-like trading was held flat on a year earlier.

But Mothercare said a 14.6% surge in online Direct in Home sales limited the UK trading woes, while its international business continued to storm ahead with 11.3% growth, when currency effects are stripped out.
Mothercare said all four regions in its international arm delivered gains in like-for-like sales. It opened a net 47 stores during the first quarter and now has 1,116 franchise stores across 60 countries.

Chief executive Simon Calver warned that "challenging" conditions would continue across the UK and eurozone for the rest of the year. He is leading a turnaround plan, focused on shutting loss-making stores, increasing online sales and driving international expansion.

It shut 13 stores across the UK in the quarter on top of 56 in the previous financial year and now trades from 242 Mothercare and Early Learning Centres in Britain, with plans to reduce this to 200 by 2015.

Mr Calver admitted the group still had a "way to go" in transforming its fortunes, but added he was "encouraged by the improving positive feedback from our customers to the necessary changes in the UK, particularly to product innovation and new clothing ranges".

Mothercare's recent product launches have included its own value clothing range, as well as feeding and pushchair products under the Innosense and Xpedior brands respectively. Its ''Little Bird'' range, which is backed by TV chef Jamie Oliver's wife Jools, is being extended this year.

Shares dropped 6% on the disappointing sales performance and following a recent rally higher. Analysts at N+1 Singer said Mothercare's recovery remained on track despite the competitive UK market, adding that first quarter sales were likely to have been hit by the timing of Easter.
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