Can the retailer turn things around?
Baby-products retailer Mothercare (LSE: MTC), which also owns the Early Learning Centre brand, has been finding the parenting business tough going in the past year.
The apple-of-its-eye international division can do no wrong, but the sibling UK operation has become a stroppy, disobedient child.
In its third-quarter trading update, released this morning, Mothercare reported international retail sales growth of 15% for the 13 weeks to 7 January.
The group opened its 1,000th store outside the UK during the period, and launched in four new countries -- Chile, Colombia, Iraq and Morocco -- extending its already impressive geographical reach.
However, an accelerated programme of store closure sin the UK saw domestic sales fall 7%, and as a result total group sales were down 1%.
Turnaround?
On the face of it, there appears to have been some progress in arresting the UK decline.
Like-for-like sales were down 3% in the third quarter, compared with a 7% fall in the first half of the year. Furthermore, the company reported a 5% increase in like-for-like sales in December.
The initial market response was to push the shares up 2% this morning to 168p, but I'd say those like-for-like sales are less rosy than the bold numbers suggest.
The comparative period last year was particularly weak, with the company claiming that adverse winter weather conditions had knocked 4% off UK like-for-like sales for the quarter. Given those exceptional circumstances, and a swathe of store closures since, this year's third-quarter like-for-like sales decline of 3% actually looks pretty grim to me.
Mothercare currently has no chief executive, and remains in the process of a structural and operational review of its UK business.
There was no concrete news on these areas in this morning's update, which amounted to little more than that both the search for a new CEO and the business review are "progressing well".
Mothercare reported a pre-tax loss of £4m (before exceptional items) at the half-year stage, widening net debt, and a slashed interim dividend. I wrote at the time that the shares were not priced low enough to be a recovery bet for me, or a punt on a possible radical outcome to the review of UK operations.
Today's third-quarter trading update hasn't changed my view.
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