Mothercare has revealed that underlying profit before tax jumped 51% to £19.6m and it made its first statutory profit in five years for the year to March 26, as the group’s turnaround plan takes hold.
UK like-for-like sales were up 3.6% for the year and UK losses were reduced by 64% to £6.4m.
Margins in the UK improved by 70 bps and the firm said it had “significantly” lower levels of stock going into sale with 66% of product sold at full price compared to 57% two years ago.
Online sales in the UK were up 15%, and now account for 37% of total UK sales, up from 32% the year before. Total UK sales were up 0.3% to £459.7m.
However, the firm’s international business remained “challenging” with currency headwinds resulting in a 12.2% drop in profit to £40.3m. International like-for-like sales dropped 4.5% while total international sales dropped 7.5% to 689.7m
During the year Mothercare closed 19 underperforming stores, refurbished 47, relocated four and opened two new shops in the UK.
Globally the firm opened a net of 37 new stores, closing unprofitable shops in Honduras, Slovenia and Uzbekistan.
Mark Newton-Jones, chief executive, said Mothercare was making “significant progress” towards returning the UK business to profit.
“Improvements to our customer offer, both in store and online, and the look and feel of the store estate are driving like-for-like sales growth for a second consecutive year. There is still much to do, but we are encouraged by our maintained trajectory towards profitability in the UK.”
He added that more improvements were needed in the international business.
“The issues are primarily at a macro level, with economic and currency headwinds persisting. Whilst we recognise these pressures, we believe that we can also make some improvements in how we operate. We are exiting underperforming stores whilst continuing to grow space where there is potential for long term growth. We are also taking the lessons learned from our success in the UK and exporting them to our international markets.”