Mothercare to create 400 UK jobs

Published on Wednesday 18 November 2009 20:26

MOTHERCARE will create 400 jobs in the UK as part of plans for a further 33 of its biggest format stores over the next two years, the company said yesterday.

The retail chain, which announced an 11 per cent rise in half-year pre-tax profits to 10 million, expects to open eight of its "parenting centres" in time for Christmas, including a store at Kirkcaldy, in Fife. A further 25 will be opened by the end of 2011.

Mothercare currently has 82 of the out-of-town stores, featuring a full Mothercare and Early Learning Centre produce range, plus concessions.

The group, which has 389 stores in the UK, has also identified 12 in-town sites where it plans to open "landmark" stores in high-footfall locations in key shopping centres.

However, it also warned that 90 lower-profit high street stores at which leases will expire within the next three years were under threat.

As part of the continuing restructuring of its portfolio, Mothercare said it would relocate the stores to more profitable out-of-town locations, seek to renegotiate rental payments or, as a last resort, close the shops.

The group has already closed 63 lower-performing in-town stores in the first 18 months of its store overhaul programme, which followed the 85m acquisition of Early Learning Centre in 2007.

Chief executive Ben Gordon said the parenting centres currently accounted for 40 per cent of store space and 65 per cent of UK store profit.

He added: "These are true parenting destinations and bring Mothercare and Early Learning Centre's widest ranges and expertise under one roof, to provide the best possible service for parents and parents-to-be."

Gordon said that he also wanted to expand Mothercare's wholesale business.

The current state of the property market offered advantageous lease terms and a chance to enter key catchments that had previously been difficult to access, Mothercare said.

The retailer said it had traded well in the UK, with sales growth of 2.7 per cent and underlying profits up 15.4 per cent in the six months to 10 October. This was supported by a strong performance overseas, with retail sales up 29.6 per cent.

Mothercare opened 62 overseas stores in the six months, taking the number of outlets outside of the UK to 694.

Keith Bowman, an equity analyst at Hargreaves Lansdown Stockbrokers, said: "Despite some concern over slowing UK sales, today's performance is still impressive within the context of a pressured retail sector.

"UK like-for-like sales remain in positive territory, with online and international sales enjoying strong overall progress."

Shares in Mothercare closed down 0.5p last night at 625.5p.