Mothercare ‘cautiously confident’
Mothercare has said its full year adjusted EBITDA will come in ahead of analysts’ expectations at between £11.5 million and £12 million.
However, the retailer said unaudited net worldwide franchisee retail sales for the year to 26 March were impacted by varied experiences of Covid-19 in its franchisee markets despite coming in 7% ahead of last year at £385 million.
The company said retail sales are around 25% down on the total retail sales for similar territories in the year before the pandemic. Online retail sales represented 10% of total retail sales in the year, which is slightly down on the 12% for the previous financial year due to lower levels of Covid-19 restrictions on store openings.
During the period, Mothercare’s pension deficit was reduced to £66 million from £124.6 million in March 2020. It has also been upgrading its clothing ranges and is now offering customers more choice at a variety of price points as it looks to differentiate itself from its international competitors.
Clive Whiley, chairman of Mothercare, said: “As expected last year was one of further progress for Mothercare, generating free cash flow from operations as a focused, asset light global franchising business. Whilst we must now deal with the impacts of the suspension of our franchise partner’s operations in Russia, we retain the resilience to deal with this additional challenge satisfactorily.”
Looking ahead, the company said it is approaching the new financial year with a degree of cautious confidence.
Whiley said: “We continue to drive initiatives designed to maintain momentum in improving profitability particularly when we return to more normal pre-pandemic levels of business. The near halving of the pension deficit also offers the potential for material reductions in our recovery plan payments. This is a good backdrop against which to revisit our current financing arrangements and we are exploring all available alternative funding options to further improve our financial flexibility.”
