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Mothercare maps out digital plans after another difficult year

Baby and parent products retailer Mothercare has announced more losses and a reduction in global sales for its full year, following another 12 months of restructuring and downsizing.

Pre-tax losses were up by 19.9% to £87.3 million and sales dropped by 7.9% to £1.07 billion in the 53 weeks to 30 March, but the business said it was in a more stable financial position to build again in what has been a turbulent period for the retailer.

The financial year saw Mothercare complete a CVA, which involved the store estate in the UK reducing 30% with the number of sites falling from 134 to 79. UK sales were down 11.8% to £336.6 million, but there was growth internationally in Russia, China and Indonesia – although Middle East sales fell.

Mothercare has also recently completed the sale of its Early Learning Centre brand to The Entertainer, as well as the sale and lease back deal of its Watford headquarters which has generated £26 million in cash to pay down high levels of debt. The last few years at Mothercare have been dominated by change, downsizing and mounting levels of debt, but it has now reorganised its corporate structure into three divisions – global brand, UK, and business services – while bringing down net debt from £44.1 million to £6.9 million.

As the company looks to the year ahead, it has identified several digital initiatives to pursue as part of wider strategic plans to turn around its fortunes. The company reported a notable 8% decline in online sales for the full-year, which is unusual considering the year-on-year growth of eCommerce in the UK as a whole.

The business attributed UK online sales dropping to £140.1 million to the lost iPad-generated sales in store as a result of closures and a consequent slowdown in interest from online shoppers living close to shops removed from the high street. Mothercare also acknowledged it cut marketing and engineering investment in online and apps, which had the duel impact of cutting traffic to and reducing performance of its platforms.

CEO Mark Newton Smith, who was replaced by Dave Wood as CEO in April 2018 only to return to the business soon after in a further sign of the upheaval hanging over the Mothercare business in recent times, said: “For the year ahead we have increased marketing spend online, specifically in the traffic driving activities of paid search, email and re-targeting. 

“Many development changes have already been put in place to improve the website performance with a redesigned check out launched and improved product presentation pages, driving an improvement in conversion.”

He added that digital development is focused on mobile and smartphone retailing, claiming that Mothercare’s mobile mix of sales and traffic is considerably higher than that across other UK retailers. Mobile sales represent 73% of total online sales, while 88% of web traffic is reportedly through a mobile device.

Newton Smith also noted that the company’s delivery proposition has been enhanced, with full tracking of orders in place and time bands introduced for customers to select from.

He reflected on the success of the Mothercare social media campaign, #bodyproudmums, which was acclaimed for its honesty and authentic representation of new motherhood – and was shared globally by millions of people around the world.

Internationally, Mothercare sells goods online via Tmall and JD.com in China, and has also recently started trading via the country’s influential social media platform, WeChat.

In total, the business trades online in 22 countries and intends to expand digitally to Saudi Arabia, Taiwan, Vietnam and Greece in the year ahead.

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