Mothercare nurses hit from robust Middle East buying and selling

Mothercare shares rose on Friday as a gross sales slowdown in its key Middle East market  was overshadowed wholesome revenue development within the first half.

The retailer, which now operates a franchise mannequin after shuttering UK shops in 2019, noticed a 17 per cent improve in adjusted pre-tax revenue to £3.4million within the 26 weeks to 23 September. 

But worldwide retail gross sales by franchise companions had been down by 15 per cent year-to-year to £137.2million, with the Watford-based agency pinning the lame on tough buying and selling circumstances within the Middle East, the place gross sales sank 20 per cent.

The Watford-based agency stated a decline in worldwide retail gross sales mirrored tough buying and selling circumstances within the Middle East which is down 20 per cent on final 12 months

Mothercare shares are up by 10.64 per cent to 5.20p in morning buying and selling on Friday.

Revenue was all the way down to £29million to £38.5million over the identical time interval a 12 months earlier. 

The agency attributed strong revenue development to ‘tighter management of prices’.

Clive Whiley, chairman of Mothercare, stated: ‘These outcomes are testomony to our continued drive to protect the energy of the Mothercare model in a quick altering retail and macroeconomic buying and selling surroundings. 

‘Against vital headwinds within the Middle East, certainly one of our core markets, we’re happy that our enterprise mannequin and disciplined strategy to price has resulted in a rise in profitability for the primary half.’ 

The group has endured a torrid few years, culminating in its UK division getting into administration in 2019 amid mounting losses and fierce competitors from grocery store chains. 

It is now run as a franchise enterprise. In the UK, it sells its items resembling child garments, toys and bedding by Boots.

Sophie Lund-Yates, lead fairness analyst at Hargreaves Lansdown stated: ‘Mothercare is in want of some self-care, after warning extra of its franchise shops may shut. 

‘Tough buying and selling circumstances, particularly within the Middle East, are inflicting issues for a corporation that is already needed to peddle extraordinarily laborious to remain afloat. 

‘An space that wants a laser-like focus from administration is the web debt pile, which stands at many instances the quantity of the group’s money income. There’s additionally a sizeable pension deficit to clear. 

‘For now, income are being supported by deep price cuts, however these can solely go on for therefore lengthy and will not be sufficient in the long term.’