- Debt reduced in the first half
- Costs of Russian exit hit business
- New boss named
Specialist retail brand Mothercare (MTC:AIM) was in demand with investors as it took some baby steps towards recovery.
Now a franchise business having shuttered its UK stores nearly three years ago, investors reacted positively to first-half results which revealed a reduced debt pile and some underlying signs of life in the business as it named Dan Le Vesconte as its new boss with a January start date. The shares were up 9.1% to 7.2p.
These results bear the scars of the company’s departure from Russia which had been a key market for sales. International retail sales by franchise partners for the 26 weeks to 24 September fell from £184.3 million a year ago to £162.1 million. However, once you strip Russian sales from last year’s total it stood at just £140.8 million.
Adjusted pre-tax profit roughly halved from £3.6 million to £1.7 million but investors seemed to be relieved the company has remained profitable. Net debt fell from £13.3 million to £11.6 million year-on-year.
Le Vesconte looks a solid hire, joining from a high-level position at US fashion brand Abercrombie & Fitch and having previously served at Vans and Dr. Martens (DOCS).
‘MOTHERCARE BECOMING MORE OUTWARD LOOKING’
FinnCap analyst Nigel Parson commented: ‘The loss of Russia as a key market is, of course, painful but there is much to commend in Mothercare’s interims: the business remain profitable, underlying retail sales were up 15%, the new product pipeline is pregnant with new ideas, the pension deficit continues to shrink, and it has successfully refinanced.
‘Mothercare is becoming more outward looking after a long period of introspection; it has barely scratched the surface of opportunities available to it and the new CEO, who joins in the New Year, will have a busy agenda to deliver.’
His counterpart at Shore Capital Eleonora Dani said: ‘The financial out-turn makes for reassuring reading, considering the significant headwinds facing the business, and is in line with our expectations.
‘A new CEO has also been appointed and is due to start in January, Daniel Le Vesconte. He brings a wealth of international brand experience in direct-to-consumer, franchise, wholesale and licensing, having worked at international players.’
