Mothercare reports a significant financial setback, marking a transition from profit to loss.
- In the first half of the fiscal year, Mothercare faced a pre-tax loss of £1.4m.
- This downturn follows a 27% drop in sales, reducing total revenue to £21m.
- Global retail revenue from franchise partners also fell by 12% to £121.2m.
- Challenges in the Middle East and excess inventory have been key factors.
Mothercare has encountered a substantial financial challenge, as evidenced by its latest half-year figures. From a prior profit of £1.8m, the nursery specialist has shifted to a pre-tax loss of £1.4m during the 26 weeks that ended on 28 September. This dramatic change is primarily due to a 27% fall in sales, which reduced total revenue to £21m.
This decrease in sales is mirrored in the company’s international operations, where retail revenue generated by franchise partners decreased by 12%, amounting to £121.2m. The company has attributed this slump to ongoing uncertainty in the Middle East. Additionally, franchise partners’ need to clear out old inventory has compounded the issue.
In response to these difficulties, Mothercare has been proactive in seeking growth opportunities. It announced an expansion into several South Asian markets through a £30m joint venture with Reliance Brands, signifying a strategic move to rejuvenate its market presence. Former CEO Mark Newton-Jones has also confirmed his intention to step down as a non-executive director, with the company preparing to appoint a new chief executive as part of its ongoing strategic realignment.
Clive Whiley, the retailer’s chair, stated that the new India joint venture and recent refinancing efforts are leveraging tools for Mothercare to explore growth opportunities. These efforts aim to strengthen connections, develop branded products, and expand licensing within new and existing markets. Whiley expressed optimism about overcoming past challenges and restoring critical mass, aiming to fulfil the company’s core objectives.
Mothercare is navigating a challenging period with strategic efforts focused on recovery and growth.
