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Mothercare share price falls 31% after profit warning | Mothercare share price falls 31% after profit warning |
(35 minutes later) | |
Shares in Mothercare have fallen 31% following a profit warning as a result of Christmas discounting in the UK and weak economic conditions overseas. | 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 volatile 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 hit sales and margins. | In the UK, weaker footfall and price cutting hit sales and margins. |
The drop in the share price wiped about £112m off the company's market value. | |
Mr Calver said full-year profits at the mother and baby products retailer were "likely to be below the current range of market expectations". | Mr Calver said full-year profits at the mother and baby products retailer were "likely to be below the current range of market expectations". |
He said Mothercare's international trading had been hit by currency movements. | He said Mothercare's international trading had been hit by currency movements. |
In addition, he said that some of its larger markets, such as Russia and the Middle East, had suffered from "unseasonal weather which impacted sales". | In addition, he said that some of its larger markets, such as Russia and the Middle East, had suffered from "unseasonal weather which impacted sales". |
UK restructuring plan | 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. | 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. | 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." | 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 acquired the owner of the Early Learning Centre (ELC), Chelsea Stores Holdings, in 2007. | Mothercare acquired the owner of the Early Learning Centre (ELC), Chelsea Stores Holdings, in 2007. |
Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, said Mothercare's takeover of the ELC business continued to cause difficulties with the toy market "extremely tough". | Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, said Mothercare's takeover of the ELC business continued to cause difficulties with the toy market "extremely tough". |
He said: "The full extent of the task ahead for the relatively new chief executive looks to have been laid bare." | He said: "The full extent of the task ahead for the relatively new chief executive looks to have been laid bare." |
Mr Bowman said previously "favourable analyst opinion" would "likely be reined in". | Mr Bowman said previously "favourable analyst opinion" would "likely be reined in". |
The retailer operates 191 Mothercare stores and 40 Early Learning Centre outlets in the UK. It also has 1,201 international stores across 59 countries. | The retailer operates 191 Mothercare stores and 40 Early Learning Centre outlets in the UK. It also has 1,201 international stores across 59 countries. |
It has closed 80 UK stores under its restructuring plan to date. | It has closed 80 UK stores under its restructuring plan to date. |
In November last year the company reported a £2m underlying profit in its half-year results and said its plan was beginning to work. | In November last year the company reported a £2m underlying profit in its half-year results and said its plan was beginning to work. |