- Mothercare falls to a half-year loss as international operations weigh on the business.
- CEO warns of recent “softening in the UK market.”
- Shares crash 17% at the open, as investors remain jittery about UK retail.
LONDON — Mothercare has become the latest British retailer to warn of difficult trading conditions, sending shares crashing 17% at the open on Thursday.
Mothercare published half-year results on Thursday, showing it slipped to a loss of £700,000 in the first six months of the year, compared to a £5.9 million profit in the first six months of last year.
UK sales rose 2.5% in the period but international performance dragged the business down. International sales fell 8% and Mothercare CEO Mark Newton-Jones said there is “no clear sight as to when things will bottom out” in the Middle East, its worst performing region.
While international weakness is the main reason behind Mothercare’s poor performance, the baby and toddler retailer warned that it is starting to see issues in the UK, its core market.
Newton-Jones said: “Towards the end of the reporting period, and in subsequent weeks, we have seen a softening in the UK market with lower footfall and spend which is consistent with recent industry reports.”
Independent retail analyst Nick Bubb says in an email: “City analysts will no doubt be getting their red pens out as they re-jig their P&L models,” on the back of Newton-Jones’ comment.
Retail goliaths John Lewis and Next are among the many shops to have warned of tough trading conditions this year and recent Visa/IHS Markit data showed the fastest fall in consumer spending for four years, as inflation hits people in their pockets. Visa warned on Monday that it expects Christmas spending to fall for the first time in half a decade this year.