Mothercare swings to profit as move to franchising pays off
Shares in Mothercare surged by more than 60 per cent today after the British baby-care products retailer said it had swung back into profitability over the past financial year.
Mothercare has reported a GBP12.1m profit for the year, saying it has seen significant improvement in profitability since its strategic transformation into a global franchising business.
Reporting on the 52-week period to 26 March, Mothercare said international retail sales of its franchise partners amounted to GBP385.3m up from GBP358.6m a year earlier.
Group turnover came in at GBP82.5m compared to GBP85.8m and adjusted EBITDA rose to GBP12m from GBP2.2m a year earlier.
Group adjusted operating profit for the period was 11.1m up fron 0.2m and group adjusted profit after tax was GBP9m compared with a GBP8.6m loss a year earlier.
Clive Whiley, chairman of Mothercare, commented: “The year under review was bookended by the Covid pandemic and the Ukraine conflict, however, despite the persistence of these difficult global challenges, we have begun to demonstrate the potential of Mothercare as an asset light global franchising business.
“This represents an inflection point for the business, with the combined benefits of more normalised circumstances and the updated financing arrangements greatly enhancing our financial flexibility.
“Accordingly, whilst mindful of the global inflationary environment and its impact on both consumers and the business we remain positive on the long-term prospects for the Mothercare brand.”
A new CEO is expected to be appointed during the current year.