UK: Mothercare claims early success for turnaround strategy as group profits surge

Mothercare has reduced its losses in the UK

Mothercare has reduced its losses in the UK - Credit: PA

Retailer Mothercare posted another big loss in the UK today but insisted there were signs that the business is now on a “firmer footing”.

The group, which is jettisoning loss-making stores as part of a three-year restructuring plan, posted an underlying UK loss of £21.7million for the year to March 30 – £3m better than the same period a year earlier.

The performance of its larger international division, which trades from more than 1,000 stores in 60 countries, made up for the UK deficit as the group’s underlying profit improved to £8.3m from £1.6m a year ago.

During the year, Mothercare closed 56 UK stores, reducing its footprint by 7.2%, and now trades from 196 Mothercare outlets and 59 under the Early Learning Centre brand.

More closures are expected as the company works towards a 200-strong estate by 2015, complemented by a stronger online division.

Chief executive Simon Calver described his first year in charge as both exciting and challenging.

He added: “I believe the work done over the last year has put Mothercare on a firmer footing, which I and all the great teams in the business look forward to building on in the years ahead.”

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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, has been extended this year.

Cantor Fitzgerald analyst Kate Calvert said she was unconvinced that the strategy will return the UK business to profit in 2015.

She added: “Management is undertaking this brand repositioning in challenging markets. Competition is fierce with most of Mothercare’s core product categories having been commoditised by pure online players and the food retailers.”

She believes Mothercare UK should re-invent itself as a social networking brand at “the heart of a mother’s community”.