Mothercare under threat from slide in pound’s value

L Loss-making high street retailer warns on prices l News comes as interim losses widen at group

Britain’s renewed five-year austerity cloud revealed in the Autumnstatementearlierthis week is set to touch parents directly next summer with price hikes for baby clothes, retailer Mothercare warned yesterday.

The group said prices are expected to rise between 3 per cent and 5 per cent from the middle of 2017 as it faces spiralling costs after the pound’s plunge since the vote to leave the EU.

Clothing and footwear will take the brunt of the price rises as Mothercare buys most of its ranges in US dollars from suppliers in the Far East and India.

The warning came as the retailer revealed that its underlying UK half-year losses to 8 October widened to £8.8 million from £6.1m in the same period of 2015. On the stock market, the shares fell 4.5 per cent to 106.5p.

Mark Newton-jones, chief executive of Mothercare, said the slide in the value of the pound – which fell to 31-year lows against the dollar immediately after June’s Brexit vote – had had a “big impact”.

He added: “We are working very hard... to take down that cost.” Newton-jones said the group had negotiated with suppliers to reduce the price impact on consumers by a third, while the company will take on about a third of the extra costs, with the remainder being passed on to customers.

Mothercare added that its first-half performance had also been hit by poor weather and a warehouse overhaul. Like-for-like UK sales fell 0.7 per cent.

It came as the Mothercare boss predicted that UK retailers would give up on the oneday sales bonanza Black Friday, due to take place today.

He said the margin-eroding event would “wither on the vine” once the industry realised it’s “not clever to mark down in the busiest week of the year”.

Mothercare’s oversea arm did better, with profits only down 4 per cent at £20.8m. On an underlying basis, group pre-tax profits fell 15.7 per cent to £5.9 million. It marks a setback after the company posted its first annual profit for five years last May.

The business is in the midst of an overhaul involving shutting a quarter of its shops and shifting focus to out-of-town stores and online sales rather than high street locations. l Pet supplies retailer Pets at Home unveiled a 12 per cent rise in interim pre-tax profits to £46m, while hailing “robust” like-for-like growth in revenues of 2.5 per cent. The firm’s dividend jumped 25 per cent to 2.5p.