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New Mothercare CEO has mountain to climb

The fourth quarter sales are set to be released on Thursday, and the news isn't good for the UK based retailer
 Mothercare experiences further drops in sales
 
 

Maternity product retailer, Mothercare are expected to announce further drops in sales and profits this week as they struggle to stop the rot.

Over the past year, the signs have been increasingly concerning among the 350 British stores, and third quarter profits leading up to January this year was the biggest indication yet that the company was in a spot of bother.

A three percent sales slump in that period has disastrously been overshadowed by the latest figures, however, which sit at a ten percent loss.

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The news will be a stark reminder of the challenges ahead for Simon Calver, who will take up the role of Chief Executive on April 30th and is expected to take drastic measures.

The 352 stores Mothercare currently own, are initially said to be whittled down to 266, although experts in the industry now believe the cull will have to bring the number as far down as 200, to reduce the rental bill sufficiently.

"The fourth-quarter pre-close will give us further important clues as to the magnitude of the task of fixing the Mothercare customer value in the UK and accelerating even further the shrinking of the UK store base," explained analyst, Peter Smedley.

A saving grace for the business though is their current success oversees. International sales have risen 18 percent across their 1,000 stores, and undoubtedly, this will give the new CEO a glimmer of hope for his UK operation.

Andrew Wade, an analyst at broker Numis, stated “We remain of the view that Mothercare can drive significant improvements in its UK business to sit alongside its international operations.

“However, with the chief executive only just appointed and a strategic review to come, we remain neutral for now.”

The reluctance to get excited about Mothercare’s future is understandable too, with the mountain that is needed to be climbed.

The last year’s profits reached a meager £1.4 million, compared to the previous year’s £28 million – a statistic that Simon Calver, alongside Chairman Alan Parker, will have to remedy as soon as possible.

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