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Mothercare records loss after poor summer weather hits sales

Mothercare (Other OTC: MHCRF - news) has slipped to a first-half loss as bad weather over the summer and turnaround costs weighed on its UK business.

The babycare retailer's international arm saw revenues boosted by the weaker pound but it had a tough time at home with sales down and warehouse changes disrupting product supply.

Mothercare reported a loss of £800,000 for the 28 weeks to 8 October, compared with a profit of £5.8m in the same period last year.

UK like-for-like sales fell 0.7%.

Internationally, where Mothercare makes nearly two-thirds of its sales, trading remained "volatile" and sales also fell though the fall in sterling meant that overall they were higher in pound terms.

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Chief (Taiwan OTC: 3345.TWO - news) executive Mark Newton-Jones said: "The last six months have been challenging and ... our sales and margin stalled in the period."

He pointed to a "widely reported slowdown in sales across the high street due to unseasonal weather through the spring/summer season".

This had resulted in a higher markdown on prices - a tactic which, while it can boost sales, squeezes profit margins.

Planned warehouse infrastructure changes had been completed but it did mean "a reduced flow of product for eight weeks in the summer" as well as a one-off cost increase.

Mothercare is in the second year of a turnaround programme which has seen unprofitable stores closed and others refurbished, and an upgrade for distribution and its online operation.

Mr Newton-Jones said despite the tough first half, the latest period had started in line with its plans and Mothercare was "well-prepared for the important peak season".

Progress in the second half would "partially compensate for the headwinds" experienced in the first, he added. Shares (Berlin: DI6.BE - news) fell 1%.

Mothercare's half-year results come as a setback after it reported its first annual profit for five years in May.