Mothercare's overseas boom continues as UK sales fall behind

OVERSEAS sales at Mothercare, the baby and children's clothing retailer, have exceeded those in its UK business for the first time in the company's 51-year history.

The group yesterday outlined plans to take advantage of the growth in emerging markets by opening at least 150 overseas stores this financial year - 50 more than previously expected.

Worldwide sales for the group rose by 7 per cent in the second quarter - with international sales up 14.2 per cent - but UK like-for-like takings were down 3.2 per cent after a 4.1 per cent decline in the first quarter.

Analysts said the weakness of the UK market, which is expected to continue in the run-up to Christmas, was a cause for concern. In its trading update, Mothercare said the buoyancy of the overseas markets was encouraging.

Chief executive Ben Gordon said: "We continue to see strong results from our global growth strategy. In the first half, overseas retail sales exceeded UK retail sale for the first time, and we now have 1,217 stores worldwide in 54 countries.

"International is growing rapidly and we have opened our 50th store in India and our 800th store overseas."

He added: "So far this year we have opened 112 new overseas stores, increasing retail space by 13 per cent. We expect to open at least 150 new overseas stores this year, 50 more than our previous estimate, increasing retail space by at least 20 per cent."

The group, which also owns the Early Learning Centre chain of toy shops, has capitalised on the growing middle class market in emerging economies - although there were signs that international growth my be slowing as the rise was an even stronger 20.3 per cent in the first quarter.

Gordon said the timing of the Moslem Festival Eid, together with the wildfires in Moscow - which meant mothers and children were advised to stay indoors - had some impact on international sales.

While sales in British stores declined, total UK business was up 1.8 per cent - thanks largely to the group's successful expansion into internet trading, which grew by 18.2 per cent.

Gordon said: "The UK consumer environment remains uncertain, and accordingly we are planning cautiously for the important second half."

Following the update, Numis Securities cut its pre-tax profit forecast from 43 million to 39.8m. Analyst Kate Kalvert of brokerage Seymour Pierce said: "Mothercare is one of the longer- term growth stories in our coverage, driven by its international franchise business. However, we remained concerned over the strength of its UK business given another quarter of weak trading."

John Stevenson of KBC Peel Hunt said: "Q2 trading is broadly in keeping with consensus expectations and we see no change to market forecasts today.We still carry concerns over UK peak trading, although international growth remains stunning, with 150 stores now opening this year."

Mothercare, founded in 1961 by Baghdad-born Selim Zilkha, has 389 stores in the UK. It recently announced a partnership with Boots - to sell children's clothing through Mini Club - which is already trading in 370 Boots stores.

ASOS:

SALES at online fashion retailer Asos rose by 47 per cent in the latest quarter, boosted by a 128 per cent increase in sales overseas and a 21 per cent rise in the UK.

The retailer, which sells both designer labels and cheaper versions, helps customers build a look based on celebrities such as Sienna Miller, Kate Moss and Coleen Rooney.

Asos, which has successfully launched its brand in America and is planning a big push in mainland Europe, said international sales are expected to overtake UK sales some time next year.

WH SMITH:

Stationery and books chain WH Smith has seen its profits rise more than expected after a record performance at its travel-based stores.

The group posted pre-tax profits of 89 million in the year to 31 August, up 9 per cent on a year earlier and despite a 4 per cent drop in like-for-like sales.

The travel business, which has 516 outlets at airports, train stations and motorway service areas, increased operating profits by 10 per cent to 53m as sales rose 1 per cent and it improved margins. The high street business, which has 573 stores, cut costs by 12m.

CLINTON CARDS:

Clinton Cards unveiled plans for an overhaul of its stores and website yesterday in a bid to modernise the brand after a difficult year for trading.

The retailer said it would update "the look and feel" of its Clinton stores, which could include a new logo, revamped shop fronts and redesigned uniforms. The overhaul will not include its Birthdays brand.

The plans were revealed as Clinton reported a drop in like-for-like sales of 2.9 per cent in the ten weeks to 10 October, following on from a slump in pre-tax profits in the year to 1 August from 24 million to 11m.