Mothercare posts £103 million loss
Mother and baby products retailer Mothercare has reported a pre-tax loss of £103 million for the year to end March as it takes steps to turn its struggling UK business around. This compares with a profit of £8.8 million in the previous year.
Underlying profit before tax fell to £1.6 million from £28.5 million a year ago. The majority of the losses were the result of £55 million writedown on the value of the group's Early Learning Centre together with charges relating to its store closure programme.
Mothercare currently operates 311 UK stores but plans to reduce store numbers to 200 by March 2015.
Chief executive Simon Calver, who joined to Mothercare in April from Lovefilm, said: "We have a long way to go, and the plan to bring the UK business back to acceptable levels of profitability will take three years."
Worldwide network sales at the group rose 6.4% to £1,232.4 million with growth coming from the retailer’s stores outside of the UK. While total UK sales fell 4.6% to £560 million, total international sales rose 17.8% to £672.4 million.
Like-for-like sales in the UK dropped 6.2%. In contrast, international like-for-like sales rose 6.1%.
Mothercare said its UK business had suffered due to "a challenging economic backdrop" and an increasingly competitive environment.
Following two profit warnings last year and a subsequent review of the business, Mothercare announced a new strategy for the next three years. Priorities include reducing non-store costs and restoring UK profitability as well as accelerating international growth and developing the retailer’s worldwide multi-channel offering.
Calver added: "We need to invest in e-commerce, be ruthless with our non-store cost base and use our scale and growth worldwide to drive sourcing economies and pass these savings onto the customers to improve our value for money around the world.
"Everything we do will enhance customer value, experience and loyalty in each of our 59 countries. My team and I are up for the challenge and, whilst there is much to do in this difficult economic climate, I look forward to delivering the 'Transformation and Growth' plan. As a team, this will be our most important delivery yet."
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