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Mothercare profiting from the upgrade of UK outlets

By Roger Baird

Published 17/04/2015

Myleene Klass has designed ‘Baby K’, a range of baby and children’s clothes for Mothercare
Myleene Klass has designed ‘Baby K’, a range of baby and children’s clothes for Mothercare

Baby and child retailer Mothercare said a programme of store closures, refits and a drive for more full-price sales was beginning to turn around its UK business.

The company, which also owns the Early Learning Centre brand, said these initiatives lifted like-for-like sales 5.1% in its final 11 weeks of the year to March 28, with total sales rising 1.5%.

The firm, which has six stores in Northern Ireland, added that UK store space contracted by 4.5% over the year, leaving the firm with 189 stores as part of its ongoing closure programme. However, it has not closed any of its stores here.

The company has used the services of celebrity Myleene Klass as a designer of a range of baby and children's clothes, Baby K.

The improvement follows a £100m fundraising last October from shareholders to fund the modernisation and digital overhaul of the UK business. Shares jumped by more than 7% yesterday.

A refit programme is under way to reverse under-investment which has meant 80% of the group's UK store portfolio has not been refurbished in the last seven to eight years.

The new look gives stores digital screens and video walls, iPads, customer wi-fi and click-and-collect enhancements.

The retailer added that online sales grew by 31.8% during its fourth quarter, and by 18.3% over the year.

Chief executive Mark Newton-Jones said: "In the UK our strategy of reducing promotional and discount activity and returning to being a full price retailer has continued to stabilise margin.

"It is still early days, but we are putting the foundations in place by modernising and investing in our business."

The retailer added that its international business grew shop floor space by 9% over the year, giving it 1,273 stores across Europe, Asia, Latin America and the Middle East.

Its international operations grew retail sales by 2.1% in actual currencies over the year, hampered by a strong pound, weak eurozone demand and an economic slowdown in Russia.

Mr Newton-Jones said: "In international, the underlying businesses remain robust but economic pressures have affected sales."

Numis analyst Matthew Taylor said: "In our view, this is further confirmation of the more pragmatic retailing approach, with further benefits likely to accrue from the store refit and infrastructure modernisation programmes.

"We expect a significant reduction in the UK operating loss over the next few years, allowing investors to focus on the successful international business."

Belfast Telegraph

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