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Apr 6, 2017
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Online focus pays off for Mothercare at home and abroad

Apr 6, 2017

Parent-to-child retail specialist Mothercare is benefitting from the migration of shoppers online with the company saying Thursday that the 11 weeks to March 25 saw UK comparable sales rising 4.5%. The company’s total UK sales rose 3.2% in Q4.

Mothercare is becoming a more online-focused business

This rise was supported by its online strength with its e-sales up 13.6%. While for many companies that would not be enough to tip it into positive territory overall, with Mothercare now sourcing 41% of its sales online, it made a major impact.

But what about its physical stores? The company did not shout so loudly about their performance and with it having closed a number of stores (its UK space was down almost 6% year-on-year) the story around physical store sales will be understandably less exciting than that of online sales.

But one thing is clear, the Q4 performance is a definite improvement on the rest of the year. For the year-to-date, total UK sales dipped 0.1%, compared to the 3.2% Q4 rise. Online sales rose only 7.8%, again compared to that much better 13.6% surge in Q4. And UK comparable sales were up a tiny 1.1%, well behind the 4.5% Q4 rise.

So it is clear that the UK is seeing a marked improvement in just the past few months but what about international? The picture there is more mixed. The company said many international markets are now in growth, but the Middle East remains challenging. China, Indonesia and Russia have all benefitted from currency tailwinds.

And while international sales rose 15.4% in Q4 and 10.3% for the year-to-date, when exchange rate benefits from the weak pound are factored-out, those figures turned into 1.7% and 2.4% drops. This is despite the company trading from more physical space abroad during the two periods that a year earlier.

But there is plenty of potential for future growth internationally given the company’s online strength and it opened 10 transactional websites during the year. It is now trading online in 21 countries and that translated into full-year online sales growth of 64% in constant currency and 86% in actual currency.

Mothercare sells fashion, accessories and equipment for parents and young children

CEO Mark Newton-Jones was upbeat, if not actually being bullish. “Following a solid final quarter, our overall group performance remains broadly in line with market expectations for the year,” he said.

He added that “customers' response to our spring/summer ranges has been positive, as has the feedback on the new website and our new store environment”. On the latter front, the company has refurbished 70% of its store estate to its new, modern format in the past two years.

The firm’s customer database now stands at over 3m active customers, a factor that is helping both online and store sales as it “allows us to communicate seamlessly between our digital and physical channels,” the CEO said.

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