Mothercare confirms store closures
Mother, baby and child retailer Mothercare has revealed a 23.4% drop in annual profit as it announced the closure of more than a quarter of its UK stores.
The group, which issued a profit warning at the start of the year, said the downsizing of its store portfolio was in response to the ongoing challenging retail conditions.
By March 2013, the company said it planned to have reduced its total store numbers to about 266 from 373. It said it was "in the fortunate position" of having 120 leases expiring in the next two years.
Underlying pre-tax profit fell to £28.5m for the 52 weeks ended 26 March 2011 from £37.2m the year before. Sales rose 3.6% to £793.6m.
Like-for-like UK sales in the year to the end of March fell by 4% due to "adverse weather conditions in key trading weeks before Christmas, together with a general weakening in the consumer environment and increased competition", the company said.
This led to clearance sales of autumn and winter stock, in particular toys, which hit profit margins.
While over a hundred high street store closures have been earmarked, a further 40 rent reductions have been pencilled in for March 2013.
Sales at UK stores open over a year dropped 4% as UK consumers continue to tighten their purse strings. The retailer expects trading to remain tough.
Meanwhile its International goes from strength to strength with sales rising 16.3%.
"We are on track to meet the International growth targets set out in December and we are announcing today plans to enter Latin America for the first time later this year," said chief executive Ben Gordon. "In the new financial year, we expect international to continue to grow retail sales by 15% to 20% with 150 new store openings"
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