Mothercare sales dive as store closures bite back
ANOTHER market update from
Mothercare, another opportunity for investors to throw their toys out of the pram.
The ailing parent- and- baby retailer has revealed the extent of the hit from a wave of store closures agreed with landlords and creditors last year.
The deal, which was made to keep the High Street chain afloat, slashed Mothercare’s estate of stores in the UK from 134 to 79. These knocked UK sales by 23pc in the 15 weeks to July 13, while overall group sales plunged 9.2pc.
Bosses warned that profits will not grow this year amid ‘fragile’ consumer confidence and a lacklustre performance that has taken even management by surprise.
These struggles can’t be brushed off as teething problems – its UK arm has been unprofitable for years. The latest warnings come in the wake of an embarrassing management debacle that saw chief executive Mark NewtonJones fired and then brought back in, while the chairman who sacked him got the push himself. If you can’t keep up, don’t worry – the City has struggled to stay abreast of this too.
Adding fuel to the fire, it received pushback of more than 10pc of votes for several resolutions at its annual general meeting – including its pay report and the reappointment of scandal-hit auditor Grant Thornton, whose reputation has been knocked from faff at Sports Direct and blunders at Patisserie Valerie.
In a dour day for Mothercare, its shares closed down 13.9pc, or 2.75p, at 17p.
Elsewhere, the mid-cap FTSE 250 index closed up 0.2pc, or 37.59 points, at 19857.94, while the
FTSE 100 ended 0.8pc higher, up 60.01 points, at 7549.06 points.
But the Footsie’s rise was hindered by news that Indian metals billionaire Anil Agarwal is selling the almost 20pc stake he has held in Anglo American since 2017.
Agarwal became the biggest shareholder after he amassed a 19.3pc holding in the mining behemoth through bond purchases. The way he invested in the firm –buying its debt rather than shares – sparked speculation from the get-go that the Vedanta Resources boss was plotting a takeover. His exit puts that rumour to rest.
Agarwal needed to make a decision on whether to carry on the debt arrangement or buy the equivalent amount of shares.
The 65-year-old said he had made a healthy return on his investment sooner than expected – with Anglo’s share price almost doubling since he first began beefing up on bonds. Anglo’s shares closed down 4pc, or 89p, at 2098p.
It was a mixed day for Londonlisted property firms, with a modest rally among housebuilders but a
gloomier outlook in other parts of the sector.
Berkeley Group rose 2.4pc, or 95p, to 3945p after its stock was upgraded from ‘hold’ to ‘buy’ by Jefferies. A fresh analysis of the amount of money it is making on several developments has made Jefferies concede it may have under- estimated its profit forecasts by as much as 30pc.
This lifted Berkeley’s blue-chip rivals Persimmon, which closed up 1.1pc, or 23p, at 2094p, and
Taylor Wimpey, which rose 0.5pc, or 0.9p, to 173.5p. The same could not be said for
Foxtons. The estate agent said losses had widened to £3.2m in the six months to June 30, compared with a £2.5m loss in the same period of last year.
To nobody’s surprise, the culprit was the sluggish London housing market – though chief executive Nic Budden also said ‘continued political uncertainty’ was holding back housebuyers from making any big financial decisions.
Its shares ended the day down 2.6pc, or 1.5p, at 56.9p.