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Losses mount at Mothercare

Mothercare’s group adjusted loss before tax increased 138% year on year to £6.2m in the 28 weeks to 6 October, as tough trading continues to bite.

Total group revenue fell 13% to £295m. Total international retail sales dropped 7.3% to £369.6m, while total UK sales fell 14.3% to £196.2m.

However, the business reduced statutory group loss before taxation to £14.4m from £16.8m in 2017 and net debt more than halved to £21.5m from £44.1m for the same period last year.

Mothercare said a further reduction in net debt will be achieved through selling and leasing back its UK head office.

The retailer said it was “on track” with its strategic transformation plan to deliver at least £19m in cost savings. The UK store closure programme is ahead of schedule, the business now has a “leaner organisational structure.”

Mark Newton-Jones, CEO, said: “Over this period, we have continued our relentless focus to transform Mothercare into a business that has a sustainable and relevant future for its global customer base.

“We have completed the capital restructuring of the business, the UK store closure programme is well underway and due for completion earlier than planned, we are making our sourcing operations more efficient and our cost-saving initiatives are well on schedule.

“This momentum has allowed us to focus on revising the overall structure of the group, something which will help drive a greater focus on becoming a stronger global brand, with improved product design, marketing and distribution of Mothercare products around the world. At the same time, in the UK, the team will be singularly focused on managing trading and operations, as a typical franchisee would, with the objective of bringing the UK business back to profitability.

“Our international business is showing signs of recovery after a difficult few years and some core markets, including Russia, China and Indonesia, have moved into growth. The UK retail environment, however, remains very challenging and given the ongoing uncertainty with consumer confidence, alongside the short-term impacts of our operational changes and restructuring programme, we expect performance in the remainder of our financial year to remain volatile.

“Thereafter we are confident that our strategy will ultimately reinvigorate the business and restore Mothercare as a leading global specialist for parents and young children.”

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