Mothercare Warns On Profits After Sales Slump

The Guardian

2m read

8 January 8.52am

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Mothercare has issued a profit warning after its sales slumped over the Christmas period.

The UK maternity and childrenswear specialist is the second big high street name to warn on profits after Debenhams said last week it would cut jobs and close more stores after a poor festive period.

At least 20 retailers will reveal over the next few days how they performed over Christmas.

Tesco is expected to be one of the Christmas winners, but

Marks & Spencer is continuing to struggle. Both are due to issue their trading updates on Thursday. Mothercare had also been scheduled to report that day, but brought its statement forward.

Neil Wilson, senior market analyst at ETX Capital, said: “Clearly Mothercare et al are up against it and the update does not bode especially well for the retail sector ahead of an important week of releases.”

Shares in Mothercare crashed more than 30% to an all-time low of 42.05p and later traded down nearly 24% at 47.3p. At this level, the company is valued at just £80m.

Mothercare plc

49.00p -3.16%

Tesco plc

211.8p 3.05%

Marks & Spencer Group plc

310.2p 1.11%

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The mother and baby retailer said UK like-for-like sales slumped by 7.2% in the 12 weeks to 30 December, with online sales falling 6.9%. Online sales make up more than two-fifths of its total UK sales.

Mothercare is now predicting a pre-tax profit of £1m to £5m for the year as a whole. The City had expected profits to halve to £10m from £19.7m.

The company blamed a slump in consumer demand since the end of September.

The Mothercare chief executive, Mark Newton-Jones, said: “There has been a softening in the UK market with lower footfall and website traffic resulting in lower spend in both stores and online. This trend has continued.”

He said the retailer held off from discounting in the run-up to Christmas but discounted more heavily in the post-festive sale.

Since taking the helm three years ago, Newton-Jones has closed 100 loss-making UK outlets and modernised 70% of the remaining stores. Last spring he said the chain would shut up to 70 of its 152 UK stores and stop selling clothes for older children.

This article was written by Julia Kollewe from The Guardian and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

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Source : http://www.hl.co.uk/news/2018/1/8/mothercare-warns-on-profits-after-sales-slump

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