Mothercare returns to sales growth

http://www.guardian.co.uk/business/2012/oct/18/mothercare-sales-growth

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Mothercare returned to underlying sales growth in the UK in the second quarter after 10 consecutive quarters of decline, in a sign that suggested its turnaround strategy was working.

Shares in the company, which has 280 UK and 1,098 international stores, rose 12% on Thursday as a better performance in the UK more than offset a slowdown in overseas growth blamed on weak euro zone markets.

Mothercare, battling intense competition from supermarkets, the internet and a tough British consumer environment, said sales at UK stores open for at least a year rose 0.3% in the quarter – the 13 weeks to 13 October.

That beat expectations for a decline of about 5% and compares with a like-for-like fall of 6.7% in its first quarter.

"It's still early days but we're encouraged that the UK is beginning to respond positively to the actions taken," said chief executive Simon Calver, the former head of Amazon's Lovefilm who joined Mothercare in April.

Mothercare closed 31 UK stores in the first half, part of Calver's strategy to reduce the total to 200. Overall UK sales fell 6.2% in the second quarter, reflecting store closures.

Mothercare has also cut clothing prices, price matched competitors in home and travel categories, reduced delivery prices for online orders and improved delivery windows.

"The £2.50 T-shirts, the £5 jeans, the outfits for less than £8 are driving people in," said Calver.

Shares in Mothercare, up 37% over the last six months after slumping in the previous year, were up 28 pence at 263 pence at 1011 GMT, valuing the business at £222m.