Mothercare’s struggles abroad have taken the shine off an improving performance on the high street.
The babywear retailer blamed weakness in its Middle Eastern stores for an 8.3 per cent drop in underlying international sales in the past three months.
The group’s overseas shops have been in decline for the past year, as consumer spending dwindled in oil-rich Gulf nations such as the UAE and Bahrain. However, the flattering effect of the weak pound translated this fall into a 2.2 per cent sales increase.
Mothercare fared better at home, reporting a 1.9 per cent rise in like-for-like sales in the UK over the 13 weeks to July 8. It said online growth had slowed sharply to 3.3 per cent while high street sales had revived, although the past three months had probably been a blip.
“[We] don’t believe this represents an underlying permanent shift in customer behaviour,” Mark Newton-Jones, chief executive, said.
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Analysts at JP Morgan said the retailer’s return to like-for-like growth was “an important milestone as the group continues to make progresses on its path to profitability”. Total sales in Britain were down 1.8 per cent, hit by Mothercare’s decision to close 27 shops during the past year. Overall, sales were flat compared with a year ago.
Mr Newton-Jones has pruned the retailer considerably since rejecting a £270 million takeover offer from the US chain Destination Maternity three years ago. The group returned to annual profit last year after half a decade of losses.
Shares fell 1p to 102p yesterday, valuing the group at about £175 million.