Growing global footprint lifts Mothercare results

Published on Thursday 20 November 2008 21:17

BABY and maternity goods retailer Mothercare has booked a near-doubling in profits helped by strong performances at its international and online divisions.

In an increasingly rare bit of good news from the high street, the group said underlying profit before tax had surged 94 per cent to 9.5 million on sales 1 per cent higher at 359m.

The half-year results also revealed like-for-like sales gains of 0.8 per cent in the UK. Although the figure is down on the 2.5 per cent growth recorded in the previous half-year, Mothercare has shed store space to complete the integration of its Early Learning Centre (ELC) acquisition.

Chief executive Ben Gordon said trading was holding up well despite weaker consumer confidence.

"Clearly the environment is uncertain and it's difficult to predict how it's going to be over Christmas," he said. "However, we haven't seen any major changes in consumer shopping patterns in terms of the products being bought or people trading down."

Hailing the "best half ever" for the international business, Gordon vowed to continue expanding Mothercare's global footprint. The group now has 983 stores in 50 countries, including China.

Mothercare said it planned to increase its presence in India by a further 100 stores in the next three years, adding that it saw "huge potential" in the Middle East. Underlying profit as the international unit rose 59 per cent to 7m.

Meanwhile, Mothercare's Direct business, which encompasses online retail, a catalogue operation and social networking site Gurgle.com, enjoyed a 25.4 per cent rise in first-half sales to 50.4m.

Gordon said: "Our international business has delivered its best ever half and, despite a challenging market, we have grown like-for-like sales in the UK, with Direct performing particularly well. Only 0.5 per cent of the world's babies are born in the UK so there's another 99.5 per cent for us to go after."

Seymour Pierce analyst Freddie George labelled the results "solid" but noted that "UK profits were a little disappointing", adding that he suspected "growth has slowed in the UK".

The City is looking for full-year profits to come in at about 37m.

Yesterday's underlying profit figures were issued with the assumption that the ELC business was owned for the entire first half of this year and last. The acquisition is expected to deliver 10m of annual cost savings by 2010.

Gordon added: "The Mothercare group has undergone a transformation in recent years. Growth will continue to be driven by our successful international business, the synergy benefits from the acquisition of the Early Learning Centre, the reshaping of our UK property portfolio and strong momentum in our Direct operations."

Mothercare ended the day 8 per cent higher at 290p.