Mothercare plunged in value by more than £100million yesterday as the retailer became the second to admit dire trading over Christmas.
Shares in the firm fell by 30% to 293.25p after the firm issued a profits warning yesterday when it revealed a 9.9% slump in sales in the 12 weeks to January 4. The company blamed the effects of the “highly promotional” efforts of rivals on its loss-making UK business, adding that a “weak toy market” also hit online sales at Early Learning Centre.
The poor results are a blow for chief executive Simon Calver, who joined the firm to lead a turnaround of the business in 2012.
He replaced Ben Gordon, who had been in the role for nine years, after the company’s first major profits warning prompted the group to unveil plans to shut 100 of its 350-strong store portfolio.
The company, which now has 231 stores under the Mothercare and Early Learning Centre brands, described UK retail trading conditions as difficult. It suffered “volatility” in some of its international markets, such as Russia and the Middle East.
Retail analyst Nick Bubb said that although the company’s share price was “well above” lows hit in recent years, the collapse in value marked “the end of the honeymoon for Mothercare” and Mr Calver’s strategy to focus on overseas markets.
He said: “The consensus that overseas would continue to do well while Calver turned around the UK has been badly shaken.”
Mr Bubb added: “Stabilising the UK in the face of persistent price competition in toys and ‘travel’ will be very challenging.”
The update is the second major profits warning in the sector after Debenhams said, on New Year’s Eve, that it had missed out on an anticipated surge in sales in the week before Christmas.
Analyst Matthew McEachran, at broker N+1 Singer, said: “This latest warning comes as a disappointment, highlighting that the business is still far from being in the shape necessary to cope with the volatile conditions.”