The recovery at Mothercare (MTC) continues apace as the much-reduced half-year loss and stable revenues attest. Indeed, the rate of decline in the core UK business is now marginal, with like-for-like sales down just 1.4 per cent year on year compared with a 3.4 per cent fall this time last year - and a 7 per cent fall the previous year.
Besides a renewed focus on better products, pricing and customer service, management's turnaround strategy includes cutting down the number of underperforming UK stores. Here, the group also made progress: another 18 loss-making stores were closed, bringing the group to 237 stores in the UK and closer to its target of 200.
Meanwhile, sales and profits in Mothercare's international stores are booming. International like-for-like sales rose 4.8 per cent, total international sales rose 13 per cent, and underlying international profits climbed 13.5 per cent to £25.2m. This helped Mothercare as a group finally return to profit at the underlying pre-tax level - even if the figure was a paltry £2m. Around £13m of exceptional costs, including restructuring and non-cash foreign exchange charges, make up the difference in reported figures.
Broker JPMorgan Cazenove kept its full-year estimates unchanged at £16m for adjusted pre-tax profits and 14.7p for EPS, up significantly from £4m and 3.5p last year.
MOTHERCARE (MTC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 401p | MARKET VALUE: | £356m | |
| TOUCH: | 401-403p | 12-MONTH HIGH: | 495p | LOW: 267p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 35p* | NET DEBT: | 155% | |
| Half-year to 12 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 388 | -28.6 | -28.1 | nil |
| 2013 | 376 | -11.0 | -9.8 | nil |
| % change | -3 | -62 | -65 | - |
*Includes intangible assets of £44.6m, or 50p a share | ||||
