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Weakening confidence hits Mothercare's international sales

Mothercare’s UK like-for-likes were up 2.1% for the 11 weeks to March 26, but its international sales were hit by currency headwinds and weakening consumer confidence.

Mothercare

Total UK sales were up 0.8%, despite a planned 6.4% year-on-year reduction in space. The group ended the quarter with 170 UK stores – 162 Mothercare and eight Early Learning Centre – of which 56 are now trading in its updated and refitted format.

Its performance in the UK was boosted by online sales, which were up 5.6%. Online sales now account for around 35% of total UK sales.

The kidswear retailer said a continued focus on full price sales led to further improvements in its gross margins.

Meanwhile, its international business continued to be affected by ongoing economic and currency headwinds. Retail sales were down 10.8%, or 9.7% in constant currency.

All four regions suffered a drop in sales. In the Middle East consumer sentiment was impacted by the sustained lower oil price, resulting in a significant decline in constant currency sales.

In Asia, China in particular was affected by weakening consumer confidence. Europe and Latin America were impacted by adverse currency movements.

Space in these markets was up 4.6% year-on-year. It ended the quarter with 1,310 stores – 947 Mothercare and 363 Early Learning Centre.

Overall, worldwide sales were down 6.7%, with total group sales up 1.4%.

Chief executive Mark Newton-Jones said: “Overall group underlying profit for the full year 2016 is within the range of current market expectations.

“The UK is responding well to our strategy with continued sales growth and improved margins. International continues to be impacted by adverse currency and weakening consumer confidence in some key markets as economic headwinds persist.

Newton-Jones added: “In the UK we have delivered our eighth consecutive quarter of positive like-for-like sales growth with a full year of improved margins. Almost 40% of space is now in the new and much improved format, which along with a revamped online offer, improved product and service are being well received by our customers.

“International continues to be adversely affected by the sustained economic and currency headwinds. Whilst all four regions are softer, the Middle East and China in particular have been impacted by weaker consumer confidence. Along with our partners, we continue to see opportunity to grow space and are now translating key learnings from modernising the UK into our international markets.

“In the year ahead, we expect to make further progress in the UK. However, our international markets are likely to remain challenging with the current trends in space, sales and currency continuing into the new financial year.”

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