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Mothercare profits up 112% as it grows into a digitally-led business

Profits have more than doubled at Mothercare, thanks to ongoing strategic initiatives and a significant reduction in losses. The mother and baby retailer's underlying pre-tax profits increased 112% to £7 million for its 28 weeks to 10 October 2015.

Mothercare said its digital strategy continues to improve with online sales up 22% to £78 million, now accounting for 36% of UK retail sales. Mobile is the main channel for Mothercare customers, which makes up 80% of online traffic and 56% of online sales, while 34% of online orders are now chosen to be picked up from store using the retailer's click & collect service.

The retailer has also been introducing iPads to its stores, with its entire estate now kitted out with the technology which allows customers to make online orders in Mothercare shops. According to the retailer, the iPads drive in-store online sales growth of 36% with in-store ordering now representing 45% of all online sales.

Meanwhile, UK like-for-like sales increased 3.5% and international like-for-likes decreased 2.3%.

Mark Newton-Jones, CEO of Mothercare, said: "We are a year into our turnaround; making good progress against each of our strategic pillars and as a result underlying profits for the first half have more than doubled.

"Our work to return the UK business to profitability continues to pay off, with growth in both gross margins and like-for-like sales. Improved product architecture, better buying and a focus on full price retailing helped drive the stronger margin growth. Our new store format is going down well with customers, and these refurbished stores are delivering encouraging uplifts in both sales and profit. The UK is annualising against our new trading approach and is performing well; but there is still more work to do."

Mothercare also continued to modernise its store estate over the last six months, with cafés and play areas, as well as improved fixtures, signage and navigation around the stores. This has led to improved dwell times and conversion rates.

The retailer now has 173 stores in the UK and 1,310 stores in 60 countries elsewhere in the world. 

Rebecca Marks, consultant at Conlumino, commented: "Mothercare is making good progress in becoming a more digitally led business, with online sales growth of +22% to £78m. In its attempts to reduce the barriers between shopping channels, it has introduced iPads into its UK stores. This has helped it to generate instore online sales growth of +36%, while online ordering in-store now represents 45% of all online sales. However, there are still challenges to overcome to make its proposition more compelling, including improving its fulfillment service and competitiveness. For example, Mothercare’s next day delivery charge of £7.95 is significantly higher than most of its rivals."

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