Driven mainly by an increase of 18 percent in international retail sales, Mothercare has reported a rise of 4.5 percent in its worldwide network sales for the fourth quarter. Shares of the group rose as much as 3.10 percent at 0835 AM BST on LSE. But total group sales decreased by 4.2 percent with total UK sales down by 9.5 percent.
Mothercare has almost completed its structural and operational review and the resultant strategy will be delivered by March 2015 which includes a transformation of the UK business and increased International growth.
"Since November, a significant amount of progress has been made across the business. We launched a structural and operational review, appointed a new CEO, closed a significant number of underperforming stores and commenced a consultation programme to streamline our head office function. We have also introduced immediate initiatives aimed at improving value and service for our customers. This will see us operate a lean, more competitive business, focused on the existing profitable stores in a smaller UK portfolio, combined with a state of the art online platform. Our International business continues to perform strongly and we plan to further accelerate growth," said Executive Chairman Alan Parker.
According to the group, as part of its transformation and growth strategy, it has identified savings in non-store overhead costs of £20 million per annum basis by March 2015 and is also planning to reduce UK head office payroll costs by 16 percent.
During the year 2011-12 Mothercare closed 62 stores in the Britain, reducing its total stores in the Britain to 311. As already stated by the group it is planning to close further 111 stores by March 2015, making the total store base to 200. This move is expected to help the group in improving its UK profits by £13 million annually over next three year by March 2015.
"From our weekend visit to one of the stores, it would appear that some elements of the plan may already be in place; for example the company is attempting to get some feedback on the customer's perception of service using business-card-sized 'my customer' cards at point of sale, each with a unique code, offering a chance to win £100 in exchange for a review of service received on the day. We were a little surprised to receive an unexpected 20 percent discount on the item we bought but it may suggest that the company is already starting the process of clearing old stock," said Jean Roche, Analyst at Panmure Gordon.
For the full year ended 31 March 2012, the group's worldwide network sales increased by 4.3 percent, total group sales were up 0.7 percent and total UK sales were down 6.3 percent.