Mothercare today said its sales revival had stalled over Christmas as weak demand for toys took its toll.
Thebabycare retailer blamed a tougher trading environment for a 1.6% fall in UK same-store sales during the eight weeks to January 7 – a performance analysts said was worse than had been expected.
It also represented a reversal on trading in the five weeks to November 12 when underlying sales rose 0.5%.
Shares in Mothercare fell 2% as its comments on the weaker toy market echoed those made by Argos owner GUS and high street chain Woolworths.
Clothing sales were flat compared with a year ago, but the group said it resisted the urge to cut prices early to attract more shoppers into its stores.
With the level of stock carried into the end-of-season sale under tight control, Mothercare said margins for the full-year should be in line with expectations.
Chief executive Ben Gordon said operating costs had been successfully managed and would be better than expected for the second half of its financial year.
He said: “Our overall performance is resilient in the tougher trading environment. The business is in good shape going forward and we are confident of making further progress.”
In a trading update, Mothercare said total UK sales were down 0.6% during the 13 weeks to January 7 and 1.1% lower during the final eight weeks of that period.
It has more than 160 high street outlets and 69 out-of-town branches in the UK, as well as 200 international franchise sites, which were continuing to perform well.
Mothercare recently passed the halfway stage of its three-year turnaround plan, which has involved an overhaul of its high street stores and depots.
A new £13m national distribution centre will be built at Daventry to increase the availability of reserve stock and enable its logistics team to make deliveries on time.
New product ranges have also been developed and March will see Mothercare begin selling furniture for “first bedrooms” such as beds and wardrobes.
Nick Bubb, of Evolution Securities, said Mothercare should meet his pre-tax profits forecasts of £19.5m for the year to March 26.
Although the market was difficult, Bubb voiced concerns that Mothercare was losing ground to rivals because of its relatively high pricing.
References: EGi News 13/01/05
