Mothercare Shares Erupt 14% on Profit Warning Confirmation
Mothercare Shares Erupt 14% on Profit Warning ConfirmationReuters

Mothercare shares rocketed by 14% in early trading after the British baby products retailer said there should not be any more bad surprises about its profits this year.

The Mothercare stock price sky rocketed by over 14% to 186.50p within the first hour of trading after the group confirmed that its full year underlying profit is expected to be in line with current market forecasts.

"After a difficult third quarter, it is encouraging to note that we have seen some improvement in trading for both International and the UK," said Alan Parker, Chairman of Mothercare in an interim management trading statement.

"International has continued to increase space and constant currency sales growth is stronger than the previous quarter, with positive like-for-likes. However the pace of currency devaluation, as highlighted in January, has increased with all four regions impacted. This adverse currency impact is expected to persist into next year. Nevertheless, our franchise partners continue to see opportunity and their business plans confirm double-digit space growth."

"We have continued to close loss-making stores and focus on a lean retail operation. We are increasingly moving to a multi-channel business with 29% of the sales mix, up from 25% in the previous year, attributable to our 'Direct business'. UK like-for-like sales and margins are in line with expectations for the quarter, despite continued pricing-pressure in home and travel.

"We remain profitable at Group level and are focused on eliminating UK losses whilst also continuing to exploit our growth potential across our International markets."

At the end of February, Mothercare's chief executive officer Simon Calver announced his shock immediate departure.

Although Mothercare did not specify the reasons for Calver's departure, it said that he will receive £250,000 (€303,000, $419,000) in lieu of his six months' notice period.

He left in March and Mark Newton-Jones was appointed interim chief executive until the group finds a permanent replacement.

In January, Mothercare shares plunged by nearly 30% at one point after the UK retailer issued an annual profit warning.