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Mothercare issues profit warning Mothercare share price falls 31% after profit warning
(35 minutes later)
Mothercare has issued a profit warning after being hit by Christmas price discounting in the UK and weak economic conditions in overseas markets. Shares in Mothercare have fallen 31% following a profit warning as a result of Christmas discounting in the UK and weak economic conditions overseas.
Total worldwide group sales fell 6.1% in the 12 weeks to 4 January, with UK like-for-like sales down 4%.Total worldwide group sales fell 6.1% in the 12 weeks to 4 January, with UK like-for-like sales down 4%.
Chief executive Simon Calver said "difficult" trading conditions in the UK and volatility in international markets had been behind the sales fall. Chief executive Simon Calver said "difficult" trading conditions in the UK and volatile international markets had been behind the sales fall.
In the UK, weaker footfall and price cutting had hit sales and margins. In the UK, weaker footfall and price cutting hit sales and margins.
Mr Calver said the retailer's full year profits were "likely to be below the current range of market expectations".Mr Calver said the retailer's full year profits were "likely to be below the current range of market expectations".
He said Mothercare's international markets had also been hit by deflation.He said Mothercare's international markets had also been hit by deflation.
"In some of our larger markets such as Russia and the Middle East we have also experienced some unseasonal weather which impacted sales," he added."In some of our larger markets such as Russia and the Middle East we have also experienced some unseasonal weather which impacted sales," he added.
UK restructuring plan
Ishaq Siddiqi, market strategist at ETX Capital, said the company's online services had also suffered a "big drop" after it decided not to repeat last year's free delivery offer.
He said the move was a "bad call" by Mothercare.
Mr Siddiqi added: "Management now have to figure out a turnaround strategy or face the real likelihood of a fate similar to that of Comet and Woolworths."
Mothercare has branches in 60 countries but has recently shut 63 in the UK as part of its restructuring programme.Mothercare has branches in 60 countries but has recently shut 63 in the UK as part of its restructuring programme.
The profit warning is a contrast to the £2m underlying profit Mothercare posted for its half-year results in November last year, as the company said its restructuring plan was beginning to work. In November last year the company posted a £2m underlying profit for its half-year results and said its restructuring plan was beginning to work.