Mothercare UK sales slip further in full-year results - ToyNews

Mothercare UK sales slip further in full-year results

Outlines plans to streamline business, including new UK online and in-store e-commerce platform.
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Mothercare has announced preliminary results for the 53 weeks ended March 31st 2012 and an update on the Transformation and Growth plan. Worldwide, the group has 1,339 owned and franchised stores in 59 countries - 409 in Europe, 318 in Asia, 311 in the UK, 290 in the Middle East and Africa and 11 in Latin America.

UK sales of £560m for the year, down 4.6 per cent year-on-year.

Group sales were £812.7m for the year, up 2.4 per cent on 2011 (£793.6m).

The group underlying profit before tax fell to £1.6m (2011: £28.5m), due to a one-off exceptional charge of £104.4m of which £78.5m already reported in the first half.

Results on a non-statutory, but more comparable, 52-week basis are set out in the Financial Review.

The retailer has outlined four key opportunity areas over the three years of the plan:

1. Lean retail: Reduce non-store costs by £20m per year by 2015 and improve efficiency in UK and sourcing operations

2. Restore UK profitability: Focus on profitable portfolio of 200 stores, retaining national coverage and benefiting profit by a further £13m per year. Drive sales by redefining value proposition, launch innovative products and improve store level customer service and satisfaction.

3. Accelerate International growth: Increase sales growth to 20 per cent per year. Rapidly expand our store base in India, China, Russia and Brazil and other key markets;

4. Multi-channel worldwide: Launch new UK online and in-store e-commerce platform to step change conversion and drive sales growth. Introduce websites in all major international markets.

Alan Parker, chairman said: "This has been a tough year for Mothercare and we have completed a comprehensive review of the business. Simon Calver has now joined as chief executive and I have reverted to the role of non-executive chairman. Simon brings the right blend of turnaround skills and multi-channel global brand experience for Mothercare's long term growth.

"Looking ahead to the immediate future the UK market remains challenging, however, International continues to grow. Our focus on cost reduction is a priority in achieving a performance improvement this year. Overall we now have a robust plan for transformation and growth with new, strong leadership capable of delivering the results."

Simon Calver, chief executive added: "I am excited to have joined the Mothercare group as CEO and I am confident about the opportunities ahead. Worldwide network sales are up 6.4 per cent and our brands remain as relevant to our customers today as they ever have been. I have been fully involved in the formulation of the Transformation and Growth plan and I know that it is both the right plan and one which the team and I can deliver.

"We have a long way to go, and the plan to bring the UK business back to acceptable levels of profitability will take three years. We need to invest in e-commerce, be ruthless with our non-store cost base and use our scale and growth worldwide to drive sourcing economies and pass these savings onto the customers to improve our value for money around the world.

"Everything we do will enhance customer value, experience and loyalty in each of our 59 countries. My team and I are up for the challenge and, whilst there is much to do in this difficult economic climate, I look forward to delivering the 'Transformation and Growth' plan. As a team, this will be our most important delivery yet."

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