Mothercare returns to profitability but supply crisis and lockdowns hit business for retailers

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Mothercare returns to profitability but supply crisis and lockdowns hit business for retailers

  • Mothercare revealed its first-half global retail sales fell modestly to £ 184.3m
  • Its makers in Asia have been hit by lockdown restrictions and power cuts
  • The firm expects its franchise partners to generate sales of around £ 500m next year


Mothercare has returned to profitability despite acknowledging that it has been significantly affected by supply chain disruptions and store closings.

The seller of baby products posted profits of £ 3.6 million in the six months to September 25, against a loss of £ 13.2 million in the 28 weeks to October 10 last year.

But global retail purchases for the period fell to a modest £ 184.3 million, less than a quarter of what the company normally expected.

Recovery: The baby products retailer reported a £ 3.6 million profit in the six months to September 25, compared to a loss of £ 13.2 million in the 28 weeks to October 10 last year.

Lockdowns will force the outlets to be temporarily closed, its production plants in India and Bangladesh are affected by the restrictions and manufacturers in China are hit by power outages, the company said.

It added that issues affecting international shipping would cause its franchise partners to accept products later than expected, including the autumn / winter 2021 season, and their ability to sell them at full price.

But it said the various measures that had been taken to increase its profitability had begun to ‘bear fruit’, adding that “it is well placed for further improvements in performance as retailers return to their pre-epidemic levels around the world.”

These include reducing administrative costs by 13 percent over the past year, reviewing its brands, improving its supply chain to increase delivery times and reducing costs and complexity, and incorporating a new enterprise resource planning system.

Mothercare said: ‘We remain cautious in the face of epidemic sanctions and supply chain headaches, and we believe that the second half of this financial year will deliver performance similar to the first half.’

The company has been struggling for years due to declining sales, fierce competition from rivals such as supermarkets and years of losses, and it has come to power in 2019, putting 2,500 jobs at risk.

Tie-up: Mothercare has signed an agreement with Boots to sell some of its branded products at several stores owned by the high street pharmacy chain.

Tie-up: Mothercare has signed an agreement with Boots to sell some of its branded products at several stores owned by the high street pharmacy chain.

President Clive Valley has been criticized for making nearly £ 1 million since taking over from his predecessor in April 2018, and took up another job at Dignity, a funeral care provider just two months before Mothercare took office.

Upon entering administration, the Watford-based retailer closed all of its stores in the United Kingdom, where it is an online-only business, although it has 740 international firms operated by franchises.

Mothercare has signed an agreement with Boots to sell some branded products, such as luggage, clothes and car seats, at several stores owned by the high street pharmacy chain.

If the coronavirus is unaffected, its franchise partners will generate sales of around £ 500 million next year, based on the amount of goods it is committed to buy in the two seasons of 2022, it said.

The company’s results show that we are getting closer to unlocking Mothercare’s true underlying potential, reflecting the strong foundation we have created for business in recent years, with the Kovid-19 still dominating.

‘With a positive response to our new product lines and a direct performance structure, we are entering the second half with growing confidence for our future prospects.’

Shares in Mothercare closed 3.05 percent higher at 19.4p on Thursday, meaning their value has grown nearly 70 percent since the start of the year.

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