Mothercare tumbles as it highlights weakness in international business
Shares in Mothercare tumbled as the retailer highlighted difficulties in its international business.
FTSE All-Share
4,546.24
15:20 08/05/24
FTSE Small Cap
6,634.24
15:20 08/05/24
General Retailers
4,015.51
15:19 08/05/24
Mothercare
6.20p
11:24 08/05/24
In the 11 week period to 26 March, International retail sales were down 9.7% at constant currency, with sales in actual currency down 10.8%.
In the Middle East, consumer sentiment was hit by the sustained lower oil price, resulting in a significant decline in constant currency sales. Asia, China in particular, was affected by weakening consumer confidence, while Europe and Latin America were affected by adverse currency moves.
It was a brighter picture for the UK, however, with like-for-like sales up 2.1% in the fourth quarter as online sales – which now account for around 35% of total UK sales – grew 5.6%.
Total UK sales were up 0.8% as both online and store sales benefitted from the ongoing strategy, despite the planned year-on-year reduction in space.
Worldwide sales fell 6.7% in the period, with total group sales 1.4% higher.
The company said overall group underlying profit for full year 2016 is within the range of current market expectations.
Chief executive Mark Newton-Jones said: “In the year ahead, we expect to make further progress in the UK. However, our international markets are likely to remain challenging with the current trends in space, sales and currency continuing into the new financial year.
“Nevertheless we remain firmly focussed on our strategy to build our business both in the UK and internationally and our vision remains clear - to be the leading global retailer for parents and young children."
Peel Hunt said it expected to see some downgrades in the market after the update. However, it argued that any weakness in the shares was a buying opportunity based on the UK recovery and rolling online into international markets in 12-18 months’ time.
At 1040 BST, Mothercare shares were down 19% to 153.40p.