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Mothercare vows to avoid 'knee-jerk reaction' to weak sales

Mothercare will continue its turnaround plan as normal despite an 11% fall in UK sales over Christmas, its chief executive has said.

Mark Newton-Jones told Drapers the maternity and babywear chain “wouldn’t allow a 12-week reporting period to create a knee-jerk reaction” and will continue to focus on “style, price point, design, quality and exclusivity” of its products as part of its ongoing strategy.

It will also continue to reduce its retail space across the country, aiming to close 53 of its 143 stores in the next five years through lease expiry.

“Times are uncertain at the moment for UK retail, and for the next six months until June or July, things will continue to be bumpy,” he said. 

“Inflation started to come through in costs of goods and selling prices in July 2017, and we think things will level off at the same time this year and give us a better feel for the future.

“Until then things will be relatively soft, and stock, [capital expenditure] and central costs will be closely controlled.”

He explained that the fall in ecommerce sales during the period – down 6.9% on the previous year – could be explained by the proportion of online transactions generated in stores.

“[A total of] 40% of online sales are generated in-store on iPads from our advisors; they order product for customers to be delivered to their homes. If we get a drop in footfall in store, which is what we saw, then we inevitably see a drop online.”

Less excess stock in the quarter also saw fewer online-only promotions in comparison to the same period last year, which affected cash generation, he added.

When asked if Mothercare’s plan to move away from heavy discounting will change, Newton-Jones said: “We won’t change that strategy, though if the market gets worse, we might have to change our outlook.”

Drapers revealed in November that Mothercare is planning to make up to 200 roles redundant in its UK head office as part of a wider restructuring.

 

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