Careworn Mothercare fighting on but headwinds are strong

Comment Martin Flanagan

If retailer Mothercare flung its toys out of the pram they would roll into the road and be crushed under a lorry. Good fortune has been in short supply for the group for quite a few years now.

First of all there was the retrenchment of the core bricks-and-mortar UK busi- ness, as Mothercare’s market share was squeezed by the clothes offerings of the big supermarket groups and nippy online rivals.

That was accompanied by a focus overseas to provide a countervailing force to the UK high street downturn. However, even the overseas arm is far from all sweetness and light currently, with tough trading in the Middle East’s 350 stores hitting group revenues.

On an underlying basis, Mothercare has slid £700,000 into the red at halftime from a profit of £5.9m last year. Yesterday the shares were battered in response, shedding 18 per cent.

Chief executive Mark Newton-jones says Mothercare has noticed a softening in the market in the UK, with lower footfall both in the period to 7 October and in the early weeks of the second trading half. The shutters went up at ten further UK locations in the period.

Newton-jones pointed to a 2.5 per cent rise in like-for-like sales in the thinning UK shop estate, but in the wider depressed picture phrases such as “brave face” and “whistling in the dark” came to mind.

Mothercare’s UK shops have shrunk from 400 to 143 since 2009, as it works towards its target of 80 to 100. And although its online offering has been substantially beefed up other online players in baby goods have not stood still either.

The uncertain consumer backdrop, with the dramatically reduced forecasts for UK economic growth over the next five years in Wednesday’s Budget, is the last thing Mothercare needs.