International revenue drives Mothercare growth

UK sales for the retailer slip, but overseas sales soar in the first half results.
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Mothercare has reported group sales for the 28 weeks (first half) ended October 9th 2010 of £397.1m, up 2.5 per cent year-on-year (2009: £387.3m).

Group underlying profit before tax for the period soared by 22 per cent to £12.2m(2009: £10.0m) after a £2m share based payment charge (2009: £6.1m). While group profit before tax £0.3m compared to a loss in 2009 of £7.1m.

The first half was particularly strong for Mothercare's international business with international franchisee retail sales at £293m, a rise of 17.3 per cent. This was the first time that overseas retail sales exceed UK retail sales.

The firm opened 112 new international stores, increasing retail space by 13 per cent and has gone on to increase its 2010/11 store opening target from 100 to 150.

During the first half, Mothercare also cquired a 25 per cent stake in Australia franchisee to add to its existing 30 per cent stakes in China and India.

In the UK, total sales slipped 0.4 per cent to £295.1m. Like-for-like sales were also down 3.8 per cent, which the company says is partly due to planned cannibalisation from store openings

Mothercare closed 20 smaller in-town stores during the first half and seven larger parenting centres were opened.

Direct in Home internet sales were £36.8m, a rise of 15.8 per cent. Direct in Store sales were £27.9m; up 6.4 per cent, making total Direct sales £64.7m; up 11.6 per cent.

The new Early Learning Centre website has also been launched in time for the peak Christmas trading period.

Mothercare also reported that its new Wholesale channel is expanding rapidly, with total Wholesale sales doubling to £12.6m (2009: £6.3m).

Ben Gordon, chief executive, said: "International is going from strength to strength with retail sales up 17.3 per cent and profits up 33.9 per cent. We now have 860 stores overseas in 53 countries and are on track to meet our new target to open at least 150 in total this year.

"In the UK which remains challenging, the important property restructure is progressing well, Direct continues to grow strongly and our new Wholesale channel was boosted by the successful launch of mini club, our new clothing partnership with Boots.

"The UK consumer environment remains uncertain and we continue to plan cautiously. We are however benefiting significantly from the strategic initiatives we have taken and from the rapid growth of international, Direct and Wholesale."

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