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Mothercare warns of tough times after poor Xmas

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Shares in Mothercare have plunged by 28% after the retailer issued a profits warning following a sharp drop in UK sales.

UK like-for-like sales fell by 7.2% during the Christmas period as the children’s goods retailer struggled with “lower footfall and spend”.

Despite a growing push by retailers on web trade, the firm’s online sales – which represent 42% of its UK sales – also tumbled by 6.9%.
Total UK sales also fell 11% over the period, reflecting a store closure programme linked to a turnaround plan.
Chief executive Mark Newton-Jones said: “As we signalled in November, there has been a softening in the UK market with lower footfall and website traffic resulting in lower spend in both stores and online. This trend has continued.
“Going forward, we are not anticipating any improvement in the short-term market conditions for the UK.”

He said the firm “took a conscious decision to remain at full price to protect our brand positioning” ahead of the festive season, but started discounting “heavily” towards the end of the period.
Global sales were also down by 8% during the period, while group sales declined by 2.4% as Mothercare described international trade as “challenging” and the company’s overall performance as “below expectations”.
Household spending has declined as a weak pound since the Brexit vote has squeezed family budgets amid soaring inflation which has hit 3.1%.

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Mothercare is the latest chain to report its Christmas figures amid warnings those struggling will find 2018 just as tough as the economy slows.
A survey by Visa on Monday found December 2017 rounded off the worst year for consumer spending since 2012. Consumer spending fell by 1% – down 0.3% compared with the same period in 2016.

Source: SKY