Mothercare is in the process of a much needed turnaround strategy for its UK business that aims to bring the UK side of its proposition back to profit.
After a reasonable first quarter result, the retailer has felt the effects of a tougher economic climate in the second, with like-for-likes dipping into negatives for the combined first half year.
From March onwards expect to see Mothercare increase its prices, given that close to half its products are sourced in US dollars, which will likely be another blow to UK profits.
Mothercare continues to focus on its digital business, with online sales now 40 per cent of total UK retail sales, compared to 36 per cent this time last year. However, a significant 44 per cent of online sales come from instore orders on staff iPads – which suggests consumers are visiting stores but due to limited floor space there’s poor product availability. Mothercare’s ‘online’ sales don’t look quite so impressive.
Mothercare has other issues to contend with. While the retailer is popular for newborns, in the next couple of years, the business will need to focus on retaining these consumers with celebrity and fashion-led ranges as fast fashion retailers such as H&M, Zara and Next draw this customer base from its stores.
International remains an area of success for Mothercare, boasting profits of £20.8 million. However, the volatile international market means the retailer must not rely on its international success to soften the losses it continues to make in the UK.