Analysis

Digital first bears fruit for Mothercare

With its sights set firmly on becoming a digitally-led business, Mothercare has announced the first signs of a turnaround in its fortunes.

Following the appointment in July of a new CEO, Mark Newton-Jones, and a £95m rights issue, the parents-and-children retail group saw online sales grow by 14.1% in the first half of the year, accounting for almost one third of total UK sales.

In the same period (28 weeks prior to 11 October) further evidence of the growing importance to Mothercare of emerging channels was also apparent. 71% of online sessions came from mobile devices – up from 59% last year. Click and collect accounted for 35% of all online orders, up from 32% last year.

This is against a backdrop of a decrease in total UK sales of 1.2% to £235.6m for the period, with underlying losses of £13.5m – a 9.4% improvement on last time. International like-for-like sales were up by 4.9%, but total international sales were down by 0.5% at £397.5m. International profits improved by 0.4% to £25.3m. Overall, worldwide sales were down by 0.7% at £633.1m.

Mothercare’s future strategy now rests on six pillars: to become a digitally-led business, supported by a modern retail estate, and offering good quality products backed up by strong customer service. It also aims to increase profit margins, to operate as a lean organisation whilst also investing for the future, and expanding further internationally.

Chief executive Mark Newton-Jones, who took over the role in July, said the successful rights issue gave the retailer the “financial resources and flexibility to implement our strategy.” He added: “Whilst it is still early days the results, this morning, show 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.”