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Mothercare shows promise as Christmas sales rise

LONDON, Jan 15 (Reuters) - Baby goods retailer Mothercare reported a rise in sales at its UK business over the Christmas quarter and said margins were benefitting from a reduction in price promotions.

Mothercare (LSE: MTC.L - news) is trying to revive its business in Britain, which generates around 60 percent of sales but has been making losses partly due to competition from supermarkets like Tesco and online retailers Amazon.

In September, new boss Mark Newton-Jones tapped investors for 100 million pounds to help fund a restructuring, which has included store closures and revamps and improvements to its product range. The company has also moved to a more full-priced stance over promotions to protect margins.

Despite fierce discounting by British retailers in the run up to Christmas, Mothercare delayed its end of season sale until Boxing Day, compared to mid-December in 2013. It said it had sold 20 percent more products at full price last month than in the year before.

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Online sales also improved in the period, up 16.1 percent.

Mothercare's UK like-for-like sales in the 13 weeks to Jan. 10, its fiscal third quarter, grew 1.1 percent. Its gross margin was flat after years of decline.

In the first half, underlying UK sales rose 1.5 percent.

Shares (Dusseldorf: DI6.DU - news) in the company, down 17 percent on a year ago, rose 3 percent in early trade to 178.25 pence.

The group's international business grew 14.4 percent at constant currency in the period, supported by new openings.

The retailer said it was in line to meet market pretax profit forecasts of 12.4 million pounds ($18.9 million) for the year to March, up 30.5 percent on the year before. ($1 = 0.6574 pounds) (Reporting by Neil Maidment. Editing by Jane Merriman)