Bloomberg News

Mothercare Hits Four-Week High on Holiday, Overseas Sales

January 12, 2012

(Closes shares in fifth paragraph.)

Jan. 12 (Bloomberg) -- Mothercare Plc, the U.K. children’s clothing retailer with 1,352 stores worldwide, rose to its highest in four weeks after reporting growth in holiday and international sales.

U.K. sales at stores open at least a year rose 5 percent in December, helped by promotions, the Watford, England-based company said in a Regulatory News Service statement today. Total retail sales were up almost 40 percent in Asia Pacific in the third quarter and the brand saw strong growth in Eastern Europe and the Middle East, Executive Chairman Alan Parker said.

The holiday sales gain is “the strongest number we’ve seen for quite some time,” Parker said on a conference call today. “Our international business is going from strength to strength, and the U.K. is already benefiting from management action despite the challenging trading environment.”

Mothercare opened its 1,000th store outside the U.K. in the third quarter as the company introduced its first outlets in Chile, Colombia, Iraq and Morocco. The retailer plans to close 80 stores in the U.K. this year to help manage costs, according to Parker.

The company’s shares rose as much as 3.5 percent in London trading to reach 170.25 pence, their highest intraday price since Dec. 14. The stock closed up 2 pence at 166.5 pence. The shares declined 73 percent last year.

‘Risky Play’

“Mothercare remains a risky play,” Ben Hunt, an analyst at Oriel Securities with a “buy” recommendation on the shares, wrote in a report today. “U.K. like-for-like sales have come in ahead of expectations, however the company has had to invest in margin to achieve this.”

U.K. same-store sales fell 3 percent in the third quarter, Mothercare said today. Total U.K. sales fell 6.9 percent, hurt by store closures. The company has 352 outlets in the U.K.

Chief Executive Officer Ben Gordon quit in October after the company’s shares plunged the most in 23 years on its worsened U.K. outlook. The company is reviewing a list of candidates to replace Gordon.

--Editors: Maria Ermakova, Colin Keatinge

To contact the reporter on this story: Katie Linsell in London at klinsell@bloomberg.net

To contact the editor responsible for this story: Colin Keatinge at ckeatinge@bloomberg.net


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