Mothercare warns of doubts as going concern as sales fall

LONDON • Struggling baby products retailer Mothercare reported an 8.4 per cent drop in half-year worldwide sales yesterday, hit by past troubles at its UK operations and tough macroeconomic conditions in the Middle East and China.

The company, which operates 1,010 overseas franchise stores, is dealing with rising costs and stiff competition from online retailers, leading to the collapse of its British operations last month.

"We believe that without the financial and management burden of running a UK retail operation, we can singularly focus Mothercare on its global international franchise," said chief executive officer Mark Newton-Jones.

But volatility in its key international markets, including India, Indonesia and Russia, and supply disruptions from the closures of UK stores could result in deteriorating trading performance, leading Mothercare to warn that there was "material uncertainty" in its ability to continue as a going concern.

Its worldwide sales dropped 8.4 per cent to £452.3 million (S$810 million) for the 28 weeks to Oct 12.

The reporting period included sales in its UK operations. However, adjusted pre-tax loss shrank to £5.8 million in the half-year, from £10.5 million a year earlier.

Net debt nearly quadrupled to £24.5 million at the end of the six-month period, from £6.9 million at the end of March.

Mothercare shares, which surged last month following steps to turn profitable by 2021, were marginally up at 13.4 pence as of 0938 GMT.

Meanwhile, the 11 Mothercare stores in Singapore are thriving, the retailer said last month.

Mothercare Singapore's managing director Pang Fu Wei noted that the franchise that manages stores in Singapore, Malaysia and Hong Kong does more than basic retail. It also distributes products to other chains and online marketplaces.

The firm is trying to transform into a business that is service-driven rather than focused on individual products, he said last month.

REUTERS

• With additional information from The Straits Times