Retailer Mothercare (MTC) continues to struggle like many of its high street peers although it appears to have come up with a relatively novel excuse - attributing weak trading to the negative headlines associated with its financial restructuring.
The company has been fighting to avoid insolvency, closing 50 stores as part of a company voluntary arrangement or CVA - a mechanism which allows a company to reduce its liabilities to creditors.
The shares fall 7.9% to 16.2p as it reports a widened first half loss and like-for-like sales down 11.1%.
AJ Bell investment director Russ Mould says chief executive Mark Newton-Jones talks about transforming Mothercare into a business that has a ‘sustainable and relevant future’.
STUBBORN SCEPTICISM
‘He sounds like a broken record as we’ve heard this countless times in the past. Mothercare feels like one of the longest ever recovery stories in the retail sector and quite frankly it is remarkable that shareholders are still being patient.
‘The company blames negative press coverage for affecting its UK sales performance. A business in its situation shouldn’t go blaming others.’
‘It should really take a hard look at its proposition and question whether the service standards are good enough, the website easy to use, the prices competitive, and the entire customer experience pleasant enough.’
‘If it fails on any of these counts then shoppers will simply look elsewhere and Mothercare would have no-one to blame but itself.’
And after all it is hard to blame the media for the decision not to accept the £266m on offer from US rival Destination Maternity back in 2014.
STILL HAS FANS
House broker Shore Capital identifies some ‘green shoots’, noting the progress on the restructuring. Analyst Clive Black says: ‘So, much done, much to do but the tunnel end might just be in sight.’
His counterpart at Numis Andrew Wade says: ‘Despite the unfavourable trading trends, there were positives on cost savings, cash, and the operational transformation of the business.’
