Mothercare PLC FY18 trading update (1631B)

TIDMMTC

RNS Number : 1631B

Mothercare PLC

08 January 2018

MOTHERCARE PLC

FY18 trading update

 
 -- UK like-for-like declilne impacted by lower footfall and spend, 
  both in stores and online, following the continuation of consumer 
  trends flagged in our half year results 
  -- International sales remain challenging, stabilising toward 
  the end of the period 
  -- Overall Group performance below expectations 
------------------------------------------------------------------- 
 

Mothercare plc, the leading global retailer for parents and young children, today issues the following trading update, which covers the 12 week period to 30(th) December 2017.

UK

   --      UK like-for-like sales decline of 7.2%. 
   --      Online sales decline of 6.9%. Online sales now represent c42% of total UK sales. 
   --      Total UK sales lower than last year, reflecting ongoing store closure programme. 

-- Retail space at the end of the period reduced to 1.4m sq.ft, as planned, with 143 stores (139 Mothercare and four ELC).

-- Lower gross margins due to higher discounting, but positive sell through of stock and cash generation.

International

-- International retail sales were down 3.0% in constant currency and down 6.8% in actual currency, but key markets showing signs of improvement towards the end of the period.

   --      Online sales growth of 8.5% in constant currency and 7.4% in actual currency. 
   --      Retail space at the end of the period c2.9m sq.ft with 1,131 stores. 

Group performance for 12 weeks to December 30(th) 2017

 
 
                                    FY2017          FY2018          30 December 2017 
                                 Q3       Q4      Q1      Q2      % change year-on-year 
-----------------------------  ------  -------  ------  ------  ------------------------ 
 UK                                                                12 Weeks:      YTD: 
 UK like-for-like 
  sales (1)                      1.0     4.5      1.9     3.2        (7.2)        (0.9) 
 Online Sales (1)                5.5     13.6     3.3     7.3        (6.9)         0.9 
 Total UK sales                  0.6     3.2     (1.8)   (0.2)      (11.0)        (4.5) 
 UK space (change 
  in sq.ft.)                    (4.5)   (5.9)    (7.2)   (9.2)       (6.0)        (6.0) 
 International 
 International retail 
  sales in constant 
  currencies (1)                (5.9)   (1.7)    (8.3)   (7.1)       (3.0)        (6.3) 
 International retail 
  sales in actual currencies 
  (1)                           13.2     15.4     2.2    (6.0)       (6.8)        (3.3) 
 International space 
  (change in sq.ft.)             0.0     0.9     (2.3)   (3.0)       (3.6)        (3.6) 
 Group 
 Worldwide sales (2)             7.5     10.7     0.8    (3.8)       (8.2)        (3.6) 
 Total group sales 
  (3)                            1.8    (12.2)   (0.0)   (4.9)       (2.4)        (2.4) 
-----------------------------  ------  -------  ------  ------  --------------  -------- 
 

Mark Newton-Jones, Chief Executive Officer of Mothercare plc, said:

"As we signalled in November, there has been a softening in the UK market with lower footfall and website traffic resulting in lower spend in both stores and online. This trend has continued, resulting in our UK LFL of (7.2)% in the 12 weeks to 30(th) December.

International trade was challenging in the quarter overall, but we have seen a return to moderate growth in the Middle East over the last seven weeks. Whilst this is positive news, it is too early to say whether or not this is the beginning of a more sustained up-turn in sales across the region. In Russia, our largest international country by turnover, we also saw a return to growth as the weather became colder, leading to improved trading.

In our UK business, we took a conscious decision to remain at full price to protect our brand positioning prior to Christmas but to then discount more heavily in the end of season sale. We have subsequently seen good progress with strong sell through rates on Autumn Winter clearance lines albeit these carry lower margins and will lead to a further reduction in full year margin as a result. Group cash generation and inventory positions are both strong.

In line with previous announcements and as part of our transformation strategy, we have taken decisive action to reduce our central cost base. The planned financial benefits of this will materialise in the next financial year. We continue to adopt a disciplined approach to cash management with a particular focus on controlling stock levels, together with stringent controls over capital expenditure.

Taking this approach into account we expect net debt at year-end of approximately GBP(50)m, and at this level we have sufficient liquidity and covenant headroom within our existing facilities.

Going forward, we are not anticipating any improvement in the short-term market conditions for the UK and on this basis the adjusted group profit for the year is likely to be in the range of GBP1-5m. Whilst the performance of the business has been challenging in the last few months, we remain singularly focussed on transforming Mothercare to be the leading global retailer for parents and young children."

Investor and Analyst enquiries to:

Mothercare plc

   Mark Newton-Jones, Chief Executive Officer                                      01923 206037 
   Glyn Hughes, Chief Financial Officer                                                 01923 206037 

Media enquiries to:

MHP Communications:

   Simon Hockridge / Tim Rowntree                                                     020 3128 8789 

Notes:

1 - UK like-for-like sales are defined as sales from stores that have been trading continuously from the same selling space for at least a year and include online sales. UK online sales include both website sales and sales taken on iPads in store. International retail sales, including online sales, are the estimated retail sales of overseas franchisees and joint ventures and associates to their customers. International like-for-like sales are the estimated franchisee retail sales from stores that have been trading continuously from the same selling space for at least a year. International sales in constant currency exclude the impact of movements in foreign exchange on translation.

2 - Worldwide sales are total International sales plus total UK sales. Total International sales are International retail sales plus International Wholesale sales.

3 - Total group sales is a statutory number and is made up of total UK sales and receipts from our International partners, which includes royalty payments and the cost of goods dispatched to our franchise partners.

4 - This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.

5 - This announcement contains certain forward-looking statements concerning the company. Although the Board believes its expectations are based on reasonable assumptions, the matters to which such statements refer may be influenced by factors that could cause actual outcomes and results to be materially different. The forward-looking statements speak only as at the date of this document and the company does not undertake any obligation to announce any revisions to such statements, except as required by law or by any appropriate regulatory authority.

6 - The Q3 trading announcement was scheduled to be released on the 11(th) January 2018 covering the 13 week period up to 6th January 2018. This early announcement covers the 12 week period to 30th December 2017.

7 - We will be announcing our preliminary results for the 2017/18 financial year on 17(th) May 2018.

This information is provided by RNS

The company news service from the London Stock Exchange

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January 08, 2018 02:00 ET (07:00 GMT)