Mothercare swings back to profit but supply crunch and lockdowns hit trading for retailer that survived administration

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  • Mothercare revealed that its first half global retail sales fell marginally to £184.3m. happened
  • Its makers in Asia have been hit by lockdown restrictions and power cuts
  • The firm expects its franchise partners to generate sales of around £500m next year

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Mothercare has returned to profitability despite acknowledging that it has been hit hard by supply chain disruptions and store closures.

The seller of baby products reported a profit of £3.6 million in the six months to 25 September, against a loss of £13.2 million from 28 weeks to 10 October last year.

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But global retail purchases for the period declined marginally to £184.3 million and were still less than a quarter of what the company typically estimated.

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Recovery: The seller of baby products posted a profit of £3.6 million in the six months to 25 September, against a loss of £13.2 million from 28 weeks to 10 October last year

As well as the lockdown forcing the temporary closure of outlets, the firm noted that its manufacturing plants in India and Bangladesh were hit by the restrictions, while producers in China faced power outages.

It added that problems affecting international shipping were prompting its franchise partners to receive products later than expected, including products for the autumn/winter 2021 season, and to sell them at full price. affected their abilities.

But it said the various measures it has taken to increase its profitability are beginning to bear “fruits”, adding that it is “well-placed to further improve performance as retail sales continue to grow around the world”. I am back at her pre-pandemic level.

These include reducing administrative costs, which declined 13 percent last year, reviewing its brands, improving its supply chain to boost delivery times and reducing cost and complexity, and a new venture. Involves integrating resource planning systems.

Mothercare said: ‘While we remain cautious given the ongoing pandemic restrictions and supply chain headwinds, we believe the second half of this fiscal year should perform at the same level as the first half.’

The company has been in trouble for a few years due to declining sales, stiff competition from rivals such as supermarkets, and years of losses, and fell into administration in 2019, putting 2,500 jobs at risk.

The tie-up: Mothercare struck a deal with Boots in the month after it fell through to sell some of its branded products in several stores owned by the high street pharmacy chain.

The tie-up: Mothercare struck a deal with Boots in the month after it fell through to sell some of its branded products in several stores owned by the high street pharmacy chain.

Chairman Clive Wylie has been criticized for earning nearly £1 million since taking over from his predecessor in April 2018 and taking another job at funeral care provider Dignity just two months before Mothercare took over Was.

After entering administration, the Watford-based retailer later closed all of its shops in the United Kingdom, where it has become an online-only business, but has 740 international establishments operated by franchisees.

Mothercare struck a deal with Boots earlier in the month, after falling for several stores owned by the high street pharmacy chain to sell some of its branded products, such as prams, dresses and car seats.

It added that if there are no additional major impacts from the coronavirus, it expects its franchise partners to buy for two seasons of 2022 next year with sales of around £500 million based on the amount of goods they are looking for. will earn

Whye said the firm’s results “show we are moving closer to unlocking Mothercare’s true inherent potential, reflecting the strong foundation we’ve built for the business in recent years, despite the impact that COVID-19 has had on us.” Still lying in period’.

‘With positive response to our new product ranges and a reduced operating structure, we enter the second half with increased confidence for our future prospects.’

Shares of Mothercare rose 3.1 percent to 19.4p late this morning, meaning their value has risen more than 70 percent since the start of the year.

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