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Profits up 65% at Mothercare as turnaround plan takes hold

Underlying group pre-tax profit increased by 65% to £3.3m at Mothercare for the 28 weeks to October 11, as the retailer’s turnaround plan started to take hold.

The embattled retailer narrowed its UK losses during the period to £13.5m from £14.9m year-on-year.

During the first half UK like-for-like sales were up by 1.5%, while international like-for-like sales rose 4.9%. However total sales were down in both markets. Total international sales fell to £397.5m from £399.3 and UK sales dropped to £235.6m from £238.4m as 14 loss making stores were closed.

Mothercare now has 206 UK stores in total - 183 Mothercare and 23 Early Learning Centre shops.

The retailer said it was beginning to see a better sell-through on its clothing and footwear ranges. “Clothing and footwear priority has been to improve quality and design, which in turn should reduce our dependence on promotional activity to drive sales. This approach is beginning to have the desired effect.”

Mothercare has also extended it best selling clothing collections Little Bird and Baby K, and they are now available in over half of the retailer’s stores. As previously reported by Drapers Mothercare is also trialing a number of brands in store, including Converse.

Mothercare chief executive Mark Newton Jones, who joined the retailer in July, said while it’s “still early days” the results showed “some improvement”.

“In the UK, we have made progress towards re-establishing ourselves as a full price retailer. For this approach to be sustainable, we must continue to improve our style, quality, design and innovation in product while modernising our presentation both online and in store. Our international partners continue to see growth opportunities and are encouraged by our plans to modernise the UK business.”

He continued: “Trading conditions remain challenging, but we are making progress building the foundations for the future of the business both in the UK and across our international territories. Our vision is clear, to be the leading global retailer for parents and young children.”

In October Mothercare announced it had received acceptances for roughly 95% of its rights issue, which will help turn around its UK business. Out of the 79.94 million shares from the rights issue, over 75.6 million shares were taken up.

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