Mothercare struggles to turn its fortunes around, says GlobalData

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Following today’s release of Mothercare FY figures for 2018/19, Emily Salter, retail analyst at GlobalData, a leading data and analytics company, comments: “Mothercare has emerged from the first full year of its strategic transformation plan with little evidence of recovery as total UK sales fell £44.9m to £336.6m, trading from a reduced store estate of 79 stores (from 134 in FY2017/18) as a result of its CVA. The retailer is one of many to blame its poor performance on difficult trading conditions in the UK, as well as weakened consumer confidence in the brand due to negative publicity and long term underinvestment, contributing to a disastrous H1 when total UK sales plummeted by 18.4%. Mothercare performed substantially better in its international markets, reporting growth in Russia, China and Indonesia as it tries to develop a global brand. The retailer’s share price increased by 18% in early trading as it reported seeing some signs of recovery in the UK market in the first few months of FY2019/20.

“A vital problem faced by Mothercare is that is seems to have been unable to convert shoppers to its online platform after store closures as ecommerce sales decreased significantly. Many previous Mothercare shoppers whose closest store has closed will have turned to online behemoth Amazon instead, attracted by its wide range of brands, lower prices and convenience, as well as online baby specialist PreciousLittleOne, which offers a range of branded and own-branded products. John Lewis, Tesco and ASDA are also gaining share in the baby market as specialists struggle, and Mothercare will find it hard to compete with these players in terms of convenience and price.

“Mothercare has made annual cost savings greater than its target of £19m, aided by the sale of the Early Learning Centre to The Entertainer in March and of its head office. This has allowed Mothercare a chance at a future, if it can win shoppers back from competitors. Mothercare must now focus on maximising footfall and sales from its remaining store estate, perhaps hosting instore events to emphasise its credentials as a specialist in the market and focus on what Amazon can’t do. Its online proposition must also be improved, which the retailer states as its primary focus for the UK, so it can compete with online and multichannel players in the future.”