Property was the big story in Mothercare' s half-year results, as the group outlined the second phase of its plan to rebalance its UK store portfolio.
The children's goods retailer said that phase one of its plan was almost complete, resulting in annualised cost savings of £5m from the closure of 63 underperforming high street stores. Phase two will see the group take further advantage of the favourable lease profile of its portfolio - nearly half of its leases expire within the next three years, and analysts believe it could close as many as 60 high street stores, allowing it to open 31 new out-of-town parenting centres, including 10 this year. This format currently accounts for 40 per cent of UK space, but nearly two-thirds of UK store profit, and the property restructuring is expected to add a further £10m to operating profit from 2012.
Meanwhile, underlying pre-tax profit rose by 11.1 per cent to £10m in the first half, thanks to a steady 2.7 per cent sales increase in the UK and 29.6 per cent international sales growth. Mothercare opened 62 overseas stores in the period and also announced a new Indian joint venture, doubling its store target in the country to 200.
Broker KBC Peel Hunt expects full-year pre-tax profits of £40.4m and EPS of 33.2p (£37.1m and 31.1p in 2009), rising to £45.7m and 37.6p, in 2011.
| ORD PRICE: | 634p | MARKET VALUE: | £559m | |
| TOUCH: | 631-634p | 12-MONTH HIGH: | 648p | LOW: 260p |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | 33 | |
| NET ASSET VALUE: | 192p* | NET CASH: | £8.2m | |
| Half-year to 10 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 359 | 13.2 | 11.2 | 4.6 |
| 2009 | 387 | -7.1 | -5.9 | 5.5 |
| % change | +8 | - | - | +20 |
Ex-div: 6 Jan Payment: 5 Feb *Includes intangible assets of £104m, or 118p a share | ||||
