Just as Mothercare's (MTC) UK business shows signs of recovery, the international business has come off the boil. According to chief executive Mark Newton-Jones, Mothercare's international markets - which include Russia and China - witnessed a softening in consumer demand in the six months to 10 October, with like-for-like sales dropping 2.3 per cent. Currency effects also took their toll: on a constant-currency basis, international retail sales rose 1.8 per cent, compared with a 5 per cent reported decline.
Back in the home market, Mothercare's recovery plan appears to be working. UK like-for-like sales rose 3.8 per cent, compared with a 1.5 per cent organic growth rate in the comparable period of 2014, and gross margins jumped 76 basis points following five years of decline. Over 70 per cent of sales are now full price: Mr Newton-Jones is adamant that Mothercare's days as an aggressive discounter are over.
The UK business is still losing money, but closing unprofitable stores helped more than halve the losses to £6.1m in the period. The 7.4 per cent reduction in shop space also explains the modest 0.4 per cent uplift in total UK sales to £237m. Overall, group underlying pre-tax profit (which excludes certain property and restructuring costs) more than doubled to £7m.
Brokerage Numis expects pre-tax profit of £20m for the year ending March 2016, giving EPS of 9.4p, compared with £13m and 8.4p in FY2015.
| MOTHERCARE (MTC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 223p | MARKET VALUE: | £380m | |
| TOUCH: | 222-224p | 12-MONTH HIGH: | 298p | LOW: 168p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 57p* | NET CASH: | £27m | |
| Half-year to 10 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 373 | 5.5 | 5.1 | nil |
| 2015 | 350 | 5.8 | 2.8 | nil |
| % change | -6 | +5 | -45 | - |
*Includes intangible assets of £46.5m, or 27p a share | ||||
