Revamp propels baby care store to growth

Friday 19 October 2012

MOTHERCARE surprised investors as its Jools Oliver and value ranges helped the parenting retailer return to sales growth in the UK.

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After going into the red by £103 million and losing its chief executive following poor sales, Mothercare brought in new boss Simon Calver to lead a turnaround involving store closures and a revamp of its website.

The group, which operates 203 Mothercare and 77 Early Learning Centres in the UK, saw same-store sales rise 0.3% in the 13 weeks to October 13, after a 6.7% drop in the first quarter, while online sales also bounced back to the black.Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, said: "The new chief executive appears to have made a good start."Mothercare closed 31 stores in the first six months as part of its cost-cutting plan, against its target of around 50 closures for the whole year.The wider group, which operates 1098 international stores, saw sales decline 7.5% as the impact of the UK store closures offset 10.8% growth overseas.Matthew McEachran, analyst at N+1 Singer, said while there has been improvement in the UK, he believes the promotional market may have weighed on profit margins.He said: "International, which is the engine for profits while the UK is making losses, is behind plan due to foreign exchange and the eurozone."Mothercare always had one of the most advanced global growth strategies but heavy losses in the core UK business reflect a lack of domestic focus by previous management."Direct in Home, the group's website, grew 11% in the second quarter following a revamp under the turnaround plans.Mothercare predicted further growth overseas based on its forward order book and store opening plans. Asia Pacific and the Middle East & Africa con-tinued to perform strongly in the period, while the eurozone crisis has hit its European markets.

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Revamp propels baby care store to growth

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