Mothercare tumbles as it swings to loss, highlights 'softening' UK market

Mothercare was under the cosh on Thursday after saying it swung to a loss in the first half of the year amid challenging international markets, as it warned of a "softening" in the UK.

In the 28 weeks to 7 October, the group made an adjusted pre-tax loss of £700,000 versus a £5.9m profit in the same period a year ago, and a statutory pre-tax loss of £16.8m compared to £800,000 the year before. This came as revenue fell to £339.5m from £347.7m in 2016.

UK like-for-like sales grew 2.5% during the period, but international LFL sales declined 8%.

Mothercare said its international performance remains "challenging", driven by the key Middle East market, which is dragging down the overall overseas performance. It added that it is unclear when things might bottom out in that region.

The bad news didn't end there, however, as the retailer highlighted a softening in the UK market towards the end of the reporting period, with lower footfall and spend.

Chief executive Mark Newton-Jones said: "We are working with our partners across the globe to help them improve trading by exporting our digital experience and our modern 'club' format into their territories. We have expanded our digital presence in a further three countries: India, Pakistan and United Arab Emirates."

Independent retail analyst Nick Bubb said: "City analysts will no doubt be getting their red pens out as they re-jig their P&L models."

Meanwhile Shore Capital said the tone of the outlook statement leads it to expect market wide reductions to financial forecasts for pre-tax profit. "Given the recovery nature of the business, and so an evolving profit base, those downgrades may be substantial in percentage terms."

"Once it prospered overseas while failing in the UK, but now it is just failing everywhere," said IG analyst Chris Beauchamp.

At 1135 GMT, the shares were down 16% to 70p.