The much reduced half-year loss at children's goods retailer Mothercare (MTC) demonstrates that self-help measures are making a difference. Indeed, the rate of decline in the core UK business has slowed markedly, with like-for-like sales there down 3.4 per cent year on year compared with the 7 per cent fall reported a year earlier.
Management's turnaround plan involves hacking back the UK store estate to just the 200 most profitable sites and a further 31 stores were closed during the half. Encouragingly, UK like-for-like sales actually grew 0.3 per cent in the second quarter - the first positive growth seen in the UK for 10 consecutive quarters. The underlying UK loss fell to £17m from £18.5m a year earlier.
The international operations, meanwhile, continue to grow rapidly and a net 70 overseas stores were opened during the period, bringing the total to 1,098 stores across 60 countries. Underlying profit in the international division rose 20 per cent year on year to £22.1m and like-for-like sales rose by 4.4 per cent - despite the impact from the recession-hit eurozone. But international sales still only contribute a third of Mothercare's total revenue.
Broker Numis Securities expects full-year adjusted pre-tax profit of £8.1m, giving adjusted EPS of 7.3p (from £1.6m and 1.8p for 2012).
MOTHERCARE (MTC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 306p | MARKET VALUE: | £271.1m | |
| TOUCH: | 305-307p | 12-MONTH HIGH: | 318p | LOW: 128p |
| DIVIDEND YIELD: | nil | PE RATIO: | NA | |
| NET ASSET VALUE: | 56p* | NET DEBT: | 60% | |
| Half-year to 13 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 413 | -81.4 | -86.9 | 2.00 |
| 2012 | 388 | -27.4 | -27.1 | nil |
| % change | - | - | - | - |
*Includes intangible assets of £47.6m, or 54p a share | ||||
