eBay threat to Mothercare
City fears increased competition
A City anaylst has raised concerns that mother-and-baby goods retailer Mothercare is vulnerable to booming sales on online auction site eBay.
Mothercare, which is due to issue a tradng update on Thursday, saw its share price fall by 4.3 per cent in trading on Tuesday, as analysts speculated that the retailer is suffering in the current depressed UK retail market.
Investec Securities analyst Matthew McEachran said in a research note: “Anecdotal evidence from other relevant competitors leads us to believe that sales and margin performance may be below expectations.
“Furthermore, we believe that competition on the high street may be intensifying, driven by the weak trading conditions. Also, we now suggest that the explosive growth of eBay usage could potentially influence non-clothing sales going forward.”
There has always been a strong secondary market in baby clothes and products, but the growth of eBay means that many items which were once simply passed on between family and friends or donated to charity sales are being put up for auction on the Internet.
In January, Mothercare reported that UK store sales fell by 1.1 per cent, with like-for-likes down 1.6 per cent, in the eight weeks to January 7. At the time, chief executive Ben Gordon, who has spearheaded the retailer’s sales recovery over the past two years, said Mothercare’s overall performance was “resilient in the tougher trading environment.”
