The past few years have been tough for the retail industry, with poor economic conditions ushering in a lull in consumer spending. Add the rise in popularity of internet shopping and the burden of business rates and it’s hardly surprising that once-successful high street brands such as Clinton Cards and JJB Sports and have been forced to enter administration.
However, not all retail brands who encountered difficulties during the recession have given up without a fight, with children’s store Mothercare being a prime example of resilience through tough financial times.
The chain, which also owns the Early Learning Centre brand, is currently six months into a three year turnaround plan which it launched following poor results for several years in a row. Under this plan, unprofitable stores will be closed and ranges will be re-priced in order to appeal to a broader consumer base.
Mothercare made a half annual loss of £0.6 million in the six months to October 13th of this year. While this means that the chain has not yet returned to profitability, it is by no means as heavy a loss as the £4.4 million drop seen during the same period only one year ago.
It is a similar story with like for like sales – while the decline of 3.4 per cent over the six month period is not exactly in the company’s favour, the drop has reduced by half when compared to the same period in 2011.
So far this year, the company has closed 25 Early Learning Centres and 6 branches of Mothercare in a bid to appease creditors and cut off aspects of the chain which have proven highly unprofitable. However, it intends to almost double this total by the end of the financial year, with the aim of closing 50 stores altogether by April 2013.
The chain currently operates 1,400 stores, 280 of which can be found in the UK. It is likely that a large number of the future store closures will be in Britain as business appears to be booming in Turkey and Eastern Europe, two of the chain’s most recently entered markets.
As a result of good performance in these areas, Mothercare is now looking at expansion options in the Middle East, Asia Pacific and Africa.
Chief executive Simon Calver stated his belief that the turnaround plan is already yielding positive results, allowing the company to begin planning for the long term future once more.
He said; “Our results show early signs of progress despite the challenging trading conditions in the UK and the Eurozone.”
Due to consumer confidence remaining low despite the end of the recession, the company has also lowered the prices of many ranges. However, to offset any loss in revenue as a result of the lower costs, several designer ranges have been introduced in order to recoup profits.
One such range features the input of Jools Oliver, the wife of celebrity chef Jamie Oliver.
Would you choose to shop at Mothercare, or do you think supermarket ranges such as George at Asda offer better deals when outfitting young children and babies? Do you think the designer ranges introduced in order to prevent loss of profits will be picked up on, or will the vast majority of parents simply head straight to the traditional ranges which now come with a lower price tag?
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