Struggling UK childrenswear concept Mothercare has reported sold international sales and a burgeoning online business as it recovers its mojo.
In the full year to March 28, Mothercare says its pre-tax, underlying profit rose 37 per cent to £13 million. International sales were up 5.6 per cent – an even healthier 12.4 per cent on a constant currency basis – and online sales rose 18 per cent, accounting for 30 per cent of total UK sales with over a third of online orders collected in store and 82 per cent of online traffic now generated from mobile.
UK like-for-like sales were up two per cent, and gross margin stabilised, the company said in its annual statement.
Total UK home market sales were down 0.9 per cent as a further 31 underperforming stores were closed. But the focus on expanding internationally is clearly bearing fruit: Mothercare said total selling space was up nine per cent, now numbering 1273 stores in 60 countries, with 52 new ones opened during the financial year. Mothercare made its Korean debut, opening four stores.
Chairman Alan Parker said the year was one of “major change” for the company, with a new CEO and CFO recruited, new financing arrangements entered into with its banks, an uninvited takeover offer rebuffed and a successfully completed a rights issue.
“I am confident that we now have the right leadership and plans to achieve our clear potential of being a world leading global retailer.”
CEO Mark Newton-Jones said the company’s international business has delivered growth in terms of space, sales and profit, in spite of increased economic and foreign currency headwinds.
“We are making good progress against all six pillars of our strategy and we will continue to build from this platform in the year ahead. There is still much to do and trading conditions may remain challenging, but we will stay singularly focused on our vision of being the leading global retailer for parents and young children.”
Mothercare’s international business now accounts for 64 per cent of the brand’s worldwide space and 62 per cent of sales.
The company said Asia, where Mothercare now has 397 stores in 13 countries, continues to offer exciting high growth opportunities.
“We opened our first four stores in South Korea, in the last quarter of the year. This market offers significant opportunity with a wealthy middle class, good quality retail space and a mature online market. Since the end of the year, we have exited our joint venture in India, which no longer needed our support to develop the business. India now operates on a pure franchise basis. Space was up about 17 per cent year-on-year with mid-single-digit like-for-like sales growth. Strong constant currency sales growth was diluted by ongoing currency devaluation which resulted in high single-digit sales growth in actual currency.
“Asia now has transactional websites in China, India and Indonesia.”
In the year ahead, Mothercare says it plans to continue to develop its business to become digitally led by investing in its online platform.
“At the same time, in line with the plans we communicated last year, we will modernise and refurbish 35-40 stores whilst closing 25-30 underperforming stores.”
