Mothercare Jumps Most in Two Months on Restructuring Optimism
Mothercare Jumps Most in Two Months on Restructuring Optimism
(Bloomberg) -- Mothercare Plc surged Friday despite posting a large loss and falling sales, after it said it had made significant headway restructuring its operations.
The baby and parents retailer’s shares rose as much as 19%, the most since March 18, after it said it reduced its store count to 79 from 134 a year earlier, a faster-than-expected pace. The retailer has also delivered savings of 25 million pounds ($31.7 million), well ahead of a target of 19 million pounds, and has reduced its net debt to 6.9 million pounds from 44.1 million pounds. It expects to be debt-free by the end of December.
The good news mitigated deep setbacks for the year ended March 30. Mothercare said its loss widened 20% to 87.3 million pounds on revenue that fell 14% to 566.3 million pounds. The drop in performance came after another prolonged spell of difficult trading in a competitive U.K. market where its like-for-like sales fell by 8.9%.
Hertfordshire, England-based Mothercare is one of the biggest maternity and children’s retailers in Britain but its performance has been horrid in the past decade, burdened by too many, expensive stores, rising costs, consumer uncertainty and an online business that failed to keep up with rivals.
Led by Chief Executive Officer Mark Newton-Jones, Mothercare has been streamlining the business in the past few years so it can better focus on its U.K. online and store operations while driving a capital-light overseas expansion through franchising.
Clive Black, a retail analyst at Shore Capital, said the retailer’s management team should get “enormous credit for basically saving Mothercare. The group now has room to focus upon operations that, if delivered, should result in a notable improvement in trading and so financial performance.”
To contact the reporter on this story: Deirdre Hipwell in London at dhipwell@bloomberg.net
To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, John J. Edwards III
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