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Mothercare shares plunge after poor Christmas sales

THE UK might be experiencing a baby boom but it has not benefited child products specialist Mothercare whose shares fell by nearly a third yesterday following a profit warning.

Mothercare, which owns the Early Learning Centre, said its full-year earnings would be well below analysts' expectations due to record levels of discounting and falling shopper numbers. Its decision not to repeat a free online delivery offer also hit sales.

Mothercare's shares closed down 128.5p or 30.6% at 291.5p, knocking £114 million off its stock market value which now stands at £258.7m.

Mothercare chief executive Simon Calver 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."

Mothercare said its like-for-like sales in the UK, which accounts for 70% of income, fell 4% in the 12 weeks to January 4. Total UK sales were down 9.9% due to store closures.

Total group sales, which includes its international business, dropped 6.1%.

Mr Calver said the failure to repeat a free delivery offer it had last year and a weak toy market hit the Early Learning Centre's website even though Mothercare experienced a 15% rise in online sales.

"As a result of lower UK sales and margin and the international currency impact, full year profits are likely to be below the current range of market expectations," Mr Calver said. "We continue to focus on delivering a turnaround in the UK and exploiting the global growth opportunities for Mothercare."

Mothercare acquired the owner of the Early Learning Centre, Chelsea Stores Holdings, in 2007.

Alastair McCaig, market analyst at IG, said: "Considering the birth rate for the UK in 2013 was at its highest since 1972, missing its targets by so much is more than a little careless."

Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, said: "The full extent of the task ahead for the relatively new chief executive looks to have been laid bare.

"Whilst tough conditions for the group's UK store portfolio remained, the previous driver of international growth virtually stalled."

The retailer operates 191 Mothercare stores and 40 Early Learning Centre outlets in the UK.

It also has 1201 international stores in 59 countries.

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