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Highlights:
Mothercare PLC reported a statutory profit of £3.3 million for the financial year ending in March, a recovery from a previous loss of £0.1 million.
The company experienced a 23% decline in group revenue, totaling £56.2 million, largely due to geopolitical uncertainty impacting sales in the Middle East.
Mothercare is focusing on restoring critical mass and exploring a joint venture with Reliance Brands UK for its Asian markets while working to reduce debt.
Mothercare PLC (LSE:MTC) has announced a return to statutory profitability in its latest financial year, despite experiencing a significant decline in sales. The children's goods retailer reported a statutory profit of £3.3 million for the year ending in March, compared to a loss of £0.1 million in the previous year. On an adjusted basis, the company saw a 5% increase in operating profit, which reached £6.5 million. However, net debt rose from £12.9 million to £14.9 million during the same period.
The financial results come amid a challenging market environment, with group revenue falling by 23% to £56.2 million. The decline in sales was particularly pronounced in franchise partner sales, which decreased by 13% to £280.8 million. Mothercare attributed this downturn to geopolitical uncertainties, particularly in the Middle East, which constitutes a significant portion of its sales—41% of total revenue. As a result, many franchise partners have been working to clear existing inventory that accumulated during the Covid-19 pandemic, leading Mothercare to caution that sales pressures may continue in the near future.
In the first half of the current year, franchise partner sales further declined from £137.3 million to £121.2 million. Chairman Clive Whiley emphasized the company's commitment to restoring critical mass and achieving core objectives, expressing optimism about the future.
Additionally, Mothercare is exploring a new joint venture with Reliance Brands UK to enhance its presence in Asian markets. The company is also focusing on reducing debt, which has improved its financial leverage, enabling it to move forward with confidence and appropriate investment strategies. Overall, Mothercare's efforts reflect a determination to navigate through recent challenges and capitalize on future opportunities.
