Mothercare recovery held back by weak overseas sales

A DROP in sales in the Middle East sent Mothercare’s shares down 2pc yesterday as its overseas performance continued to mar the baby and child retailer’s turnaround in the UK.

International sales were down 8.3pc in constant currency over the first quarter, a deeper fall than analysts had expected, with the firm blaming “continued weakness” in trading in the Gulf. In actual currency they were down 2.2pc.

Mark Newton-jones, the Mothercare chief executive, who joined in 2014, is midway through a turnaround programme at the company to shrink its UK estate, refresh its remaining stores and invest in e-retailing.

The strategy is reaping rewards in the UK, where first quarter like-for-like sales were up 1.9pc, the firm said in a trading update.

This figure stripped out the impact of Mothercare’s ongoing store closure programme. When factored in, this sent total UK sales down 1.8pc.

Mothercare – which ultimately wants to reduce its UK store numbers to between 80 and 100 – closed another five shops over the period and now has 147. In 2009 it had more than 400.

The firm is spending tens of millions of pounds refurbishing its remaining UK stores, including rolling out soft play areas and cafes to help attract parents back to its shops.

It is also investing in improving its online presence. First quarter online sales were up 3.3pc.

Owen Shirley, an analyst at Berenberg, said Mothercare’s international business, which is based on a franchise model and covers 55 countries, was “a bit of a black box” and proving to be a concern for investors.

Mr Shirley had expected international sales for the period in constant currency to be down just 3pc.

The shares ended down 2p at 101p yesterday.