Mothercare Reports First Profit In Five Years

Shares (Berlin: DI6.BE - news) at Mothercare (Other OTC: MHCRF - news) rose 4% after the baby retailer announced its first full-year profits for five years, as online sales drive growth.

Like-for-like sales in the UK rose 3.6% and online sales rocketed by 15%.

Chief (Taiwan OTC: 3345.TWO - news) executive Mark Newton-Jones said: "Improvements to our customer offer, both in store and online, and the look and feel of the store estate are driving like-for-like sales growth for a second consecutive year."

Mothercare closed 19 underperforming stores over the year and revamped 47 others, adding cafes and play zones to cater for parents wanting to "relax over a coffee while their toddlers have a run around in a fully supervised play zone".

The firm said that pre-tax profit came in at £9.7m compared with a loss of £13.1m last year.

Despite the group profit, the firm still posted a £6.4m loss in the UK.

Like-for-like sales at Mothercare's international business fell 4.5% and underlying profit came in at £40.3m, a fall of 12%.

Mr Newton-Jones said conditions there "remain challenging”.

Analysts say the retailer is wisely investing in digital initiatives to appeal to a new generation of millennial mothers, with online sales accounting for 37% of UK retail business.

Nivindya Sharma, analyst at Verdict Retail, said: "Its social media presence encourages engagement via competitions, advice, and guest tweeters and bloggers – all of which build a community feel and establish Mothercare’s authority in all things mother and baby.

"As it continues to refurbish its UK stores, Mothercare must make exceptional service the cornerstone of its offer, ensuring word-of-mouth referrals and customer loyalty."