Mothercare warns on profits as sales fall

Mothercare warns on profits as sales fall

Pushchairs at a Mothercare storeImage copyright
Press Association

Baby goods retailer Mothercare has issued a profit warning after reporting a big fall in sales over the crucial Christmas trading period.

Like-for-like sales fell 7.2% year-on-year, while online sales fell 6.9%.

The retailer said it had reduced its total number of stores and discounted heavily in its end-of-season sale.

It does not expect any improvement in short-term market conditions and adjusted group profit for the year is now likely to be between £1m and £5m.

Analysts had previously forecast that profits would be about £10m.

Chief executive Mark Newton-Jones said there had been a “softening” in the UK market, with fewer people visiting its stores and lower website traffic.

“In our UK business, we took a conscious decision to remain at full price to protect our brand positioning prior to Christmas, but to then discount more heavily in the end of season sale,” he said.

“We have subsequently seen good progress with strong sell-through rates on autumn/winter clearance lines, albeit these carry lower margins and will lead to a further reduction in full-year margin as a result.”

Mothercare said online sales now represented about 42% of total sales.

Like-for-like sales are those from stores that have been open at least a year.

Source Article from http://www.bbc.co.uk/news/business-42602030

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