Mothercare margins tighten as shoppers cut back
Retail group Mothercare plc said fourth-quarter group sales were up 11.4%, with full-year turnover rising 3.6%, but UK margins were lower than previously expected.
Total sales were up by 10.2% from the same period the previous year, with international operations leading the way. Sales in Britain were up by 4.7%, though they were down by 2.4% on a like-for-like basis, which excludes the wholesale business.
The stock clearing measures Mothercare had to implement mean that gross margins for its British operations will be 2.5%, down 0.5 percentage points from previous guidance. Mothercare closed 26 high street stores over the full year, but opened 12 “parenting centres”.
“In the UK we expect the consumer environment will be challenging and accordingly, we are planning cautiously,” Mothercare said.
“We will benefit from continued progress in wholesale however we expect the profitability of the UK retail operations to remain under significant pressure in 2011/12 with weak demand continuing, although input cost pressures on gross margin will be offset by cost savings.”
