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Mothercare shares on the rise after increase in UK sales

By Holly Williams

Published 23/10/2015

TV star Myleene Klass helps to open Mothercare in Lisburn in May
TV star Myleene Klass helps to open Mothercare in Lisburn in May

Retail chain Mothercare - which has eight stores in Northern Ireland - offered signs that its turnaround is gaining traction after seeing sales rise thanks to a surge in online trade and delayed end-of-season promotion.

The babycare group, which also owns the Early Learning Centre brand, saw a 20.4% jump in online sales in the 13 weeks to October 10, helping overall UK like-for-like sales rise by 6.5%.

Chief executive Mark Newton-Jones said revamp efforts were paying off. "These results give us further confidence in our strategy, but there is much more to be done. Our vision remains clear - to be the leading global retailer for parents and young children. With Christmas now quickly approaching we are gearing up to our peak trading period."

Mothercare is in the middle of a £100m turnaround plan which has seen it cut UK stores, curb discounting, refurbish remaining outlets and upgrade its ranges. The group has also been looking to cut the discounts on offer to boost profit margins, while it delayed its end-of-season sale, usually held in the first quarter.

This gave its international sales a fillip, up 5.6% in the second quarter with currency movements stripped out. But foreign exchange changes took their toll on reported international sales, down 5.3%.

Mr Newton-Jones said: "Whilst international markets remain volatile, our franchise partners continue to have confidence and have added further space during the period. However, foreign currency continues to be a significant headwind."

Shares in Mothercare rose 6% as analysts cheered a marked recovery in sales at the group, with the second-quarter performance meaning half-year UK sales lifted 3.8% overall.

Meanwhile, there's a boardroom shake-up at another major UK retailer. Debenhams boss Michael Sharp announced plans to step down in 2016 to end speculation over his role at the group amid shareholder pressure.

Mr Sharp became chief executive in September 2011 and insisted he had always intended to serve a five-year term at the retailer. He said: "I hope being transparent about my intentions will stop recent speculation becoming a distraction, allowing me and the Debenhams team to focus on delivering our strategy and the important Christmas trading period." Details of his planned departure came as the retailer reported a 2.9% rise in underlying pre-tax profits to £113.5m for the 12 months to August 29 - its first rise in annual profits for four years.

Debenhams has 161 UK stores, including five in Northern Ireland. It has struggled in recent years to keep pace with the likes of House of Fraser and resurgent rival Marks & Spencer. Debenhams has been refreshing its ranges, cutting back on sale days and launching more concessions at its stores to revive sales. The group plans to take part in the Black Friday discount day this year after trading "successfully and profitably" on the special offers day last year.

It confirmed an expected hit from the incoming national living wage, estimating it will cost it an extra £3m this year.

Belfast Telegraph

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