Update on Mothercare
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Shares of mother and baby products retailer, Mothercare, are up following the release of the company’s full year results today (22nd May).
The company’s results showed a decline in group sales, but, a decent rise in underlying pre-tax profit and were broadly in line with market expectations.
Meanwhile, Mothercare amended its debt facilities, which bodes well for the company.
Shares of mother and baby products retailer, Mothercare, are up a notable 17% (at time of writing) on the back of the company’s latest market update.
For its year ended 29th March, the company took total group sales of around £725m, a 2.6% decline from the same period last year. Like-for-like sales, however, were up 2.5%.
For its UK business, Mothercare reported a 1.9% drop in like-for-like sales for the period, which marks an improvement over the 3.6% year-on-year decline it reported last year.
Total UK sales plummeted 7.5% to £462m, which according to the company reflects the impact of the closure of on-going efforts to close its loss-making stores.
Meanwhile, underlying pre-tax profit (excludes exceptional items such as restructuring costs) came in at £9.5m, up from the £5.9m posted in the same period last year.
Including exceptional items, however, the company made a loss before tax of around £26m – versus last year’s loss of some £24m.
Looking ahead, Mothercare expects to continue closing its loss-making sores, as well as investing to improve its “product, value, and service and customer experience”, as it continues its attempt to restore profitability.
The company also announced that its lenders had agreed to increase its debt facilities to £100m from £90m (it’ll drop back to £90m from October this year).
That certainly bodes well, given that its balance sheet was starting to look somewhat stretched of late: its net debt position has been on the rise, partly driven by continued investments.
Mothercare’s latest update is relatively positive, but, the challenges facing the company aren’t over.
Indeed, while Mothercare is certainly making good progress with its international efforts despite headwinds from currency movements, continued losses in its UK business remain a drag.
That’s in addition to stiff competition, which remains – that’s forced the company in the past to engage in promotional activities thus hurting profit.
All that said, the improvement in the company’s performance shows it’s on the right track, at least.