Mothercare FY sales, profits fall amid 'uncertainty in the Middle East'
Retailer said on Thursday that both sales and profits had fallen in the year ended 29 March, something it blamed on the "continued impact of the uncertainty in the Middle East".
Mothercare said unaudited worldwide retail sales by franchise partners were down 18% year-on-year at £231.0m for the year, down from £281.0m, and stated the declines were largely a result of the "unchanged trading conditions" in its Middle Eastern market.
Adjusted underlying earnings were approximately £3.5m, in line with market expectations, while net borrowings of £3.7m at the year end marked a significant reduction from the prior year as a result of its recently announced India joint venture and refinancing.
Underlying earnings before adjusting items were now expected to be approximately £3.5m, compared to the £6.9m adjusted EBITDA shown a year earlier as its franchise partner reduced store numbers of many of its brands, with Mothercare store numbers dropping by 47 to 77.
Chairman Clive Whiley said: "Our results for last year reflect the impact of the continuing uncertainty on our franchise partners' operations in the Middle East. However, the de-leveraged business resulting from the recent India joint venture and refinancing, together with the ongoing support of our lender and pension trustees, is enabling us to continue to explore the full bandwidth of growth opportunities through connections with other businesses, the development of our branded product ranges and licensing within and beyond our existing perimeters.
"Given the factors influencing some of the company's operating markets, our immediate priority remains to support our franchise partners, ultimately for the benefit of our own business. In that context we remain in discussions with several parties to restore critical mass alongside delivering our remaining core objectives. The underlying business has continually proved its resilience and the strength of the brand is evident from the interest it generates and the resultant discussions with potential strategic partners we are having."
As of 1145 BST, Mothercare shares were down 3.50% to 2.48p.
Reporting by Iain Gilbert at Sharecast.com
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