Retailer Results / Mothercare

14/07/2016

Mothercare

Trading Update
15 weeks to 9 July 2016

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19/05/2016

Mothercare

Trading Update
52 weeks to 26 March 2016

Highlights

• UK LFL +3.6 per cent
• UK Total sales +0.3 per cent
• Underlying profit before tax up 51 per cent at £19.6m
• Further progress in UK with margins up 70 bps, online sales growth of 15 per cent, like-for-like sales growth of 3.6 per cent and losses reduced by 64 per cent
• International remains challenging with economic and currency headwinds impacting profits, which were down (12 per cent)
• Statutory profit before tax of £9.7m compared to a loss in the previous four years
• Closing net cash of £13.5m, after investing £39.2m during the year
• Review of International business completed with plans in place to strengthen the business

Summary

Mothercare continues their transformation with underlying profit before tax up 51 per cent to £19.6m. Nevertheless, the UK operation remained in negative territory with losses of £6.4m, but still a considerable improvement on the previous year when there were losses of £18.0m.

Overall, the UK business on track. There has been some good progress with enhancing the online and multi-channel proposition which has supported sales in the UK with c.15 per cent growth and 37 per cent of sales now coming through this channel. Mobile is now 81 per cent of online traffic and 58 per cent of online sales for customers ordering outside of the retail store network. 19 under-performing stores have been closed during the period leaving 56 stores in the UK – almost 40 per cent of UK space is in the new and improved store format. Margins are up by 70 bps driven by less discounting. In this period, 66 per cent of sales were driven by full-price compared with 57 per cent two years ago.

International sales remain tough. There was a reduction in receipts from International partners as a result of the adverse currency impact and de-stocking in some key markets.

Mark Newton­-Jones, Chief Executive of Mothercare plc, said: "I'm pleased to report that two years into our turnaround strategy we have recorded a 51 per cent growth in underlying profit before tax and the delivery of our first statutory profit in five years.

"The results highlight the significant progress we are making towards returning the UK to profitability. Improvements to our customer offer, both in store and online, and the look and feel of the store estate are driving like-­for-­like sales growth for a second consecutive year. Nearly 40 per cent of the store estate is now in the new and much improved format and the feedback from customers continues to be positive. This sales growth is not at the expense of gross margins which have also returned to growth. There is still much to do, but we are encouraged by our maintained trajectory towards profitability in the UK.

"Conditions for our International business remain challenging. The issues are primarily at a macro level, with economic and currency headwinds persisting. Whilst we recognise these pressures, we believe that we can also make some improvements in how we operate. We are exiting under-performing stores whilst continuing to grow space where there is potential for long term growth. We are also taking the lessons learned from our success in the UK and exporting them to our International markets. This is strengthening our International operations and improving the management of our brand globally.

"Our vision remains clear: to be the leading global retailer for parents and young children."


14/04/2016

Mothercare

Trading Update
11 week period to 26 March 2016

Highlights

UK
• UK like-for-like sales were up 2.1 per cent during Q4 with support from online sales which were up 5.6 per cent.
• Online sales now account for c35 per cent (LY: c30 per cent) of total UK sales
• Continued focus on full price sales led to another quarter of stronger gross margins
• 170 stores (162 Mothercare and eight ELC), of which 56 stores (almost 40 per cent of space) were trading in the new modern refitted format
• Total UK sales were up 0.8 per cent as both online and store sales benefitted from the ongoing strategy, despite the planned (6.4 per cent) year-on-year reduction in space

International
• International continues to be affected by ongoing economic and currency headwinds. Retail sales in constant currency were down (9.7 per cent) with currency further impacting retail sales in actual currency which were down (10.8 per cent)
• All four regions saw a reduction in both constant and actual currency sales. In the Middle East consumer sentiment was impacted by the sustained lower oil price, resulting in a significant decline in constant currency sales. In Asia, China in particular, was affected by weakening consumer confidence. Europe and Latin America were impacted by adverse currency moves
• Space was up 4.6 per cent year-on-year. Latin America saw an increase in store numbers, but a small reduction in space. Europe saw a similar reduction as we rationalised unprofitable space. We continue to see opportunities in Asia and the Middle East and grew space despite current economic conditions
• 1,310 stores (947 Mothercare and 363 ELC) and 3.0m sq.ft. of retail space

Summary

The trading update is broadly in line with management’s expectations with the UK business on track. There has been some good progress with enhancing the online and multichannel proposition which has supported sales in the UK with c.35 per cent of all sales coming through online.

The international business suffered from the economic slowdown and in constant currency terms, sales declined by 10.8 per cent.

Mark Newton-Jones, Chief Executive Officer of Mothercare plc, said: "Overall Group underlying profit for FY2016 is within the range of current market expectations. The UK is responding well to our strategy with continued sales growth and improved margins. International continues to be impacted by adverse currency and weakening consumer confidence in some key markets as economic headwinds persist.

"In the UK we have delivered our eighth consecutive quarter of positive like-for-like sales growth with a full year of improved margins. Almost 40 per cent of space is now in the new and much improved format, which along with a revamped online offer, improved product and service are being well received by our customers."


14/01/2016

Mothercare

Trading Update
13 week period to 9 January 2016

Highlights

UK
• UK like-for-like sales were up 4.2 per cent during the quarter, benefiting from online sales growth of 11.8 per cent. Online sales now represent over a third of total UK sales
• Gross margin preserved despite the unseasonably warm weather which led to higher stock and a deeper end-of-season sale
• 41 stores (25 per cent of space) refurbished and trading in the new format in time for peak trading.
• The period ended with 172 stores (164 Mothercare and eight ELC) and 1.6m sq.ft of retail space
• Total UK sales down -0.1 per cent as improved online and store performance made up for the -6.1 per cent year-on-year reduction in space.

International
• International retail sales were down -1.3 per cent in constant currency and down -9.5 per cent in actual currency, reflecting the previously highlighted and ongoing economic and currency headwinds
• All four International regions benefitted from space growth. Europe, Asia and Latin America saw retail sales growth in constant currencies with the Middle East weaker than last year
• International space continuing to develop with the opening of larger stores. Space up 5.8 per cent year-on-year with an increase of 12 stores during Q3 (45 opened and 33 closed) and ended the quarter with 1,322 stores and 3.1m sq.ft. of retail space

Summary

The trading update is broadly in line with management’s expectations with the UK business on track. Although the mild weather held back growth, overall, these are positive numbers in a difficult trading environment.

Total sales were down -0.1 per cent over the period, resulting from the 6.1 per cent reduction in space. However, it is encouraging to see online sales now representing over a third of total UK sales with growth of 11.8 per cent - offsetting store closures.

The international business suffered from the economic slowdown and in constant currency terms, sales declined by 1.3 per cent.

Mark Newton-Jones, Chief Executive of Mothercare plc, said: “Overall Group performance remains in line with market expectations, with our UK performance further improving and International continuing to be challenging.

“In the UK we have delivered healthy like-for-like sale growth, helped by a strong online performance. We maintained our full price approach and entered the end-of-season sale after peak trading, albeit with higher stock levels as a result of the unseasonably warmer weather. Margins have been preserved and remain within our guidance for the full year.

“With our International partners we continue to modernise our business using lessons learnt from the UK and continue to lay down space for the future. However sales are down as we face ongoing economic and currency headwinds.”


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