max temp: 11°C

min temp: 8°C

ESTD 1874 Search

Retail: Mothercare shares take hit following profits warning

12:25 08 January 2014

Mothercare has warned it will miss profit expectations after fierce Christmas discounting left it nursing a big fall in UK sales.

Mothercare has warned it will miss profit expectations after fierce Christmas discounting left it nursing a big fall in UK sales.

Mothercare shares lost nearly a third of their value today after the baby clothing firm became the second big casualty of fierce Christmas price wars.


The company, which has 231 stores under the Mothercare and Early Learning Centre brands, dealt a blow to its turnaround hopes by revealing that profits will be short of the City’s expectations.

It said its loss-making UK business had been squeezed by the “highly promotional” efforts of rivals and from lower footfall over the period. A weak toy market also hit online sales at Early Learning Centre.

With currency deflation in its more successful overseas business also depressing earnings, shares slumped by more than 30% in early trading today.

The update is the second major profits warning in the sector after Debenhams said on New Year’s Eve that it had missed out on an anticipated surge in sales in the final week before Christmas.

Mike Dennis, a retail analyst at Cantor Fitzgerald stockbrokers, said: “The UK baby clothing and equipment market remains very competitive, with few retailers in this category making any positive retail margins, especially as high street clothing chains, internet offers and supermarkets continue to grow space and share.”

Mothercare’s UK sales fell 9.9% in the 12 weeks to January 4, with the figure 4% lower when recent store closures are stripped out from year-on-year comparisons.

Its internet operation saw sales fall by 1% after the company decided not to repeat the previous year’s free delivery offer.

Chief executive Simon Calver described UK retail trading conditions as difficult and said the company suffered volatility in some of its international markets, such as Russia and the Middle East.

He said: “In the UK, our stores suffered similar Christmas trading pressures to those reported elsewhere.

“Customer service scores continue to improve year on year but weaker footfall and higher promotional activity led to lower sales and margins.”

The group, which has been jettisoning loss-making stores as part of a three-year restructuring plan, made a loss of £21.7million in the UK during its most recent financial year.

N+1 Singer expects a deficit of £18m in the current year to the end of March, although stronger trading by international franchise stores means the company is still set to make a profit.

Analyst Matthew McEachran added: “This latest warning comes as a disappointment, highlighting that the business is still far from being in the shape necessary to cope with the volatile conditions.”



Amazon associates picking and packing customer orders at the Amazon fulfilment centre at Hemel Hempstead, Hertfordshire. Photo:  Nick Ansell/PA Wire

Shoppers are expected to spend almost £1billion online as retailers unleash another set of bargain deals on Cyber Monday.

Ian White, managing director at Beckett Financial Services.

Beckett Financial Services has been ranked as one of the UK’s top 100 independent financial advisers by industry magazine New Model Adviser.

Josh Eames and Ryan Scillitoe of Perrywood Garden Centre and Nurseries in Tiptree who have have raised more than £5,000 for charity through a 1,000-mile cyclinge challenge.

Josh Eames and Ryan Scillitoe from Perrywood Garden Centre and Nurseries in Tiptree have raised more than £5,000 for charity through a 1,000 mile cycle challenge.

The Leading Lives team receive their tropy at the Social Enterprise UK Awards in London.

Ipswich-based Leading Lives has been named Health and Social Care Social Enterprise of the Year at the Social Enterprise UK Awards.

The Hot Off The Press premises inTacket Stret, Ipswich, which the company has vacated after 25 years.

A printing company which has operated from the centre of Ipswich for 25 years has relocated – to a purpose-built log cabin in the owner’s garden.

Elaine and Nigel Bowen of Vanguard Communications.

Two businesses which receive support from Suffolk enterprise agency Menta have received Small Business Sunday awards from entrepreneur and former BBC Dragons’ Den star Theo Paphitis.

Wayne Seddon from The Bridge House in London receives his Adnams Pub of the Year award from chief operating officer Karen Hester.

Southwold-based Adnams has named The Bridge House, near London’s Tower Bridge, as its Pub of the Year.

Georgi Rollings, left, and Emma Lawrence of Starfish Accounting.

An Ipswich based provider of online company secretarial software has reached the landmark milestone of having 10,000 users.

Robert Hughes, managing director of Hughes Electrical, and Andy Yallop, store manager, at the company's new branch in Bury St Edmunds.

Hughes Electrical has opened the doors of its new store in Bury St Edmunds following a £200,000 investment which has also created six new jobs, doubling the size of its workforce in the town.

A file picture of the Sanofi factory in Haverhill.

More than 50 jobs are to be axed at the Haverhill site of pharmaceutical group Sanofi.

Most read

Most commented

Topic pages

Local business directory

Our trusted business finder

Property search

e.g. Oxford or NW3
Powered by Zoopla

Digital Edition

Read the East Anglian Daily Times e-edition today E-edition

Great British Life

Great British Life
MyDate24 MyPhotos24