After an initial drop, shares in Mothercare (MTC) closed up 5 per cent as it reported decent second quarter trading in the UK and a stronger international performance, although this was somewhat overshadowed by unexpected margin pressure.
Worldwide network sales, which includes the UK and overseas, grew 3.9 per cent, helped by a 12.6 per cent rise in underlying international sales. UK like-for-like sales fell 1.9 per cent, which was better than consensus forecasts of a 2.8 per cent fall and against tough comparatives, with online sales up 8.3 per cent. Clothing gained market share and Mothercare made progress with its own-label ranges, but disappointingly, the UK gross margin was weaker than expected, thanks to warm weather at the start of the autumn/winter season and continued promotional pressure in the home and travel business. As such, analysts have downgraded profit forecasts for the full year by roughly £2.4m to £17.5m, driven entirely by a 50 basis point cut to the full-year UK gross margin.
