Given the recent trouble at children’s chain Mothercare (MTC) it was no surprise that fourth quarter numbers were grim. David Wood has been chief executive for less than two weeks (replacing Mark Newton-Jones with immediate effect) but he’s already had to report a 2.8 per cent drop in UK like-for-like sales over the 12-week period, which takes the yearly decline to 1.3 per cent. Internationally, things were even worse: underlying sales fell a further 3.7 per cent during the quarter, or 5.8 per cent over the year. Online was marginally better, growing by 2.1 per cent during the final period and by 1.2 per cent overall. But there’s likely more trouble ahead: financing needs remain under discussion with lenders, although Mr Wood insists his priority remains getting the company back on a sound footing.
Mothercare isn’t alone when it comes to bleak news on the high street. Carpetright (CPR) has confirmed its arrangement to enter a company voluntary arrangement (CVA). But rather than file for insolvency, Carpetright will use this arrangement to exit onerous property leases that are hampering progress. It plans to close 92 out of 205 underperforming stores, and renegotiate terms on the remainder. The group also plans to raise £60m via an equity placing in late May to help pay down debts and cover short term costs.
Trading-wise, however, things remain challenging. Even stationer WH Smith (SMWH) reported a disappointing high street performance as part of its interim results. Despite its thriving travel division, WH Smith posted a 5 per cent drop in high street sales, or 4 per cent decline on a like-for-like basis.
Recent industry data sheds further light on the health of the British high street. According to the BRC – KPMG Retail Sales Monitor data for March 2018, total retail sales grew 2.3 per cent and 1.4 per cent on a like-for-like basis. But analysts at Shore Capital said this masked volatile trading patterns and “a polarised market”. Footfall data from the monthly BRC – Springboard dataset was also weak in March, falling by 6 per cent compared to an increase of 1.3 per cent this time last year. That wasn’t helped by the recent adverse weather, and marked the sharpest fall in five years.
