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UPDATE 1-Struggling Mothercare shares boosted by better Q4 trade
April 10, 2014 / 9:01 AM / 4 years ago

UPDATE 1-Struggling Mothercare shares boosted by better Q4 trade

(Adds shares, comments, writes through)

By Neil Maidment

LONDON, April 10 (Reuters) - British baby products retailer Mothercare said on Thursday better fourth-quarter trading at home and overseas had put on track to hit annual profit forecasts, boosting its shares.

In Britain, which accounts for about 70 percent of its sales, Mothercare has pushed to close underperforming stores, revamp others and expand online amid fierce competition from Internet rivals and supermarkets.

It said sales at UK stores open more than a year fell 0.3 percent in the 12 weeks to March 29.

That marked a strong improvement from a 4 percent decline in the third quarter which had prompted a full-year profit warning.

The shares have fallen 60 percent since the January warning but jumped 16 percent on Thursday, trading up 14 percent at 186.25 pence as of 0803 GMT.

Mothercare has been helped by a good reaction to its spring/summer clothing range and more exclusive products in home and travel.

“After a difficult Q3, it is encouraging to note that we have seen some improvement in trading for both International and the UK,” Chairman Alan Parker said in a statement.

In its better-performing international arm, sales in constant currency increased by 9.8 percent, outstripping a rise of 3.3 percent in the third quarter, although currency weakness pulled that down to a 1.8 percent fall on a reported basis, with India, Indonesia, Russia and Turkey particularly effected.

The group, which named ex-Shop Direct boss Mark Newton-Jones as its interim chief executive last month after Simon Calver quit in February, said it expected UK trading to remain tough and the effects of currency devaluation overseas to persist.

It said it now expected to meet analyst forecasts for profit for the year to March 2014.

According to Reuters data, analysts expect the company to post a pretax profit of 8.3 million pounds ($14 million), ahead of a restated 5.9 million a year earlier.

“Investors will take heart from an improvement in Q4 trading trends and no further downgrades,” Peel Hunt analyst John Stevenson said.

The firm, which has 1,441 stores worldwide, had aimed to make a profit on its loss-making British operations by 2015, but said in January that 2016 to 2017 was now more realistic.

The group said it would continue to close loss-making UK stores, including some of its standalone Early Learning Centre stores, but said that chain was not up for sale.

It said it remained upbeat on its prospects overseas, where it expects double-digit space growth for the medium-term.

$1 = 0.5971 British Pounds Editing by Sarah Young and Jason Neely

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