'First positives in years' at Mothercare's Irish arm
Published 27/04/2016 | 02:30
Sales at Mothercare's Irish arm have shown the "first consistent positive trend" for a number of years, according to its directors, as the unit benefits from an improved economic environment and an exit from Examinership last year.
Turnover in the year to March 2015 fell almost 7pc to €33.2m, while the company broke even in the period, accounts for the period just filed at the Companies Registration Office show.
"The economic recession and a disproportionately high level of contracted rents, in particular legacy, upward-only leases in retail parks, high streets, and shopping centres, left the group with little or no option but to enter Examinership on July 22, 2015," the directors note.
It had incurred "significant losses" as a result of falling sales since 2008. The Irish arm exited Examinership last October, closing three stores, securing rent reductions and 250 jobs. It has about 15 outlets here.
"The underlying business remains viable and strong, with the directors anticipating a return to growth and profitability in the short to medium term," they added.
Mothercare operates as a franchise in Ireland, and that is owned by David Ward. He invested €750,000 in the franchise as part of the Examinership process. Mothercare, which is listed on the stock exchange in London, has been struggling to impress investors with a turnaround plan.
That project has seen an improvement in its UK business, but its overseas operations are still suffering. There area about 1,300 overseas outlets.
Mothercare's shares slumped 20pc in one day earlier this month after it said that sales in the 11 weeks to March 26 at its four international regions were almost 10.8pc lower on an actual currency basis. Sales at stores in the Middle East and China have been particularly hit.
But in the UK, where it generates about 60pc of its sales, underlying like-for-like sales in the same period were 5.1pc higher. It has about 190 stores in the UK.
The chain has faced stiff competition from rivals such as Primark and Amazon.
"It is still early days in our turnaround, but we are putting the foundations in place by modernising and investing in our business," said Mothercare chief executive Mark Newton-Jones this month. He has raised £100m from investors to fund the restructuring.