Mothercare’s turnaround plan is slowly paying off and it looks like it finally understands the internet.
The baby retailer’s
full-year results today show numbers are moving in the right direction: losses have shrunk from £26.1 million ($US40.53 million) to £13.1 million ($US20.34 million), sales at its UK shops — not including those closed in the year — rose for the first time in five years, and total sales inched 1% higher to £1.2 billion ($US1.86 billion).
It may not seem like much but it’s a big improvement for a retailer that looked in crisis just over a year ago.
Mothercare has struggled for the last five years due to competition from supermarkets and discounters like Primark. The company also failed to get to grips with internet shopping quickly enough.
Mothercare hit the bottom last year after chief executive Simon Calver left the company. It followed a profit warning that sent shares tumbling over 30%.
New boss Mark Newton-Jones was then drafted in to fix the business. Newton-Jones has plenty of experience in online retail, having run website Shop Direct for ten years.
Things were so bad then that Newton-Jones had to ask investors for £100 million ($US155.27 million), in the form of a rights issue, to fund his turnaround plans.
He’s since closed 31 loss-making stores in the UK to get costs under control. But a big part of his plan to return to growth is to finally crack the internet — particularly mobile.
It seems to be working. Online sales have risen by 18% in the year to £138 million ($US214.27 million), now making up 30% of all sales. Of that, 36% of sales are on mobile and a giant 82% of traffic to Mothercare’s website is now on smartphones.
The company is still loss making and has a long way to go, but it seems like Newton-Jones’ plan is working. Investors seem to think so too. Mothercare shares have risen around 20% over the last six months and has opened 1.2% higher this morning.