Mothercare sales stumble on global retail woes
Company warns of uncertainty over its ability to continue as a going concern
Worldwide sales at the retailer dropped 8.4% in its latest half-year reporting period. Photograph: iStock
Struggling baby products retailer Mothercare reported a 8.4 per cent drop in half-year worldwide sales on Tuesday, hit by past troubles at its UK operations and tough macroeconomic conditions in the Middle East and China.
The company, which operates 1,010 overseas franchise stores, is dealing with stiff competition from online retailers and rising costs, leading to the collapse of its UK operations last month.
“We believe that without the financial and management burden of running a UK retail operation we can singularly focus Mothercare on its global international franchise,” said chief executive Mark Newton-Jones.
Yet volatility in its key international markets, including India, Indonesia and Russia, and supply disruptions from closure of UK stores could result into deteriorating trading performance, leading Mothercare to warn that there was “material uncertainty” in its ability to continue as a going concern.
Its worldwide sales dropped 8.4 per cent to £452.3 million (€537.8m) for the 28 weeks to October 12th. The reporting period included sales in its UK operations.
However, adjusted pretax loss shrank to £5.8 million in the half-year, from £10.5 million reported a year earlier.
Net debt nearly quadrupled to £24.5 million at the end of the six-month period, from £6.9 million at the end of March.
Mothercare shares, which surged last month following steps to turn profitable by 2021, were marginally higher at 13.4 pence. – Reuters