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Retailer loses millions in sales of Mothercare profit tank as decision to leave Russia

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Mothercare appoints new CEO after exit from Russia cost millions in sales as retailer’s profits drop nearly 90%

  • The maternity retailer’s half-year profit falls to £0.4 million
  • Russia previously accounted for 20 to 25% of Mothercare’s global retail sales.
  • Daniel Le Visconte has been announced as the company’s next CEO.

Mothercare has avoided losses after taking a significant blow by withdrawing from the Russian market following the large-scale invasion of Ukraine.

The maternity retailer’s profit fell to £0.4m in the six months ended September 24, compared to £3.6m in the same period last year.

Mothercare’s decision in early March to suspend all operations in Russia was significant, as the country accounts for 20 to 25 percent of global retail sales.

Earnings: Maternity products retailer Mothercare posted a profit of £0.4m in the six months ended September 24, compared to £3.6m in the same period last year.

To mitigate the impact of reduced sales in this market, global retail orders by the group’s franchise partners rose 15 percent, in part due to increased demand for its goods from retail giant Boots.

Instead, overall sales fell 12 per cent to £162.1 million over the period, while online orders fell by almost a quarter to £13.1 million.

Outside of Russia and the UK, Mothercare noted a “more challenging” market in the Middle East, particularly in the UAE and Saudi Arabia.

Within the latter sector, the company blames weak demand on a new sales tax, laws requiring employers to hire more Saudis and easing restrictions on social activities.

Chairman Clive Athey said: ‘Our immediate priority now remains to support our franchise partners as we simultaneously navigate this period of pent-up demand, recover from supply chain disruptions and grow our digital sales.

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This essentially means that it will take time for business to return to pre-pandemic levels; But in the end, it benefits both our own business and that of our franchise partners in the long run.”

Trouble: Mothercare endured a rough few years, with its UK division going under administration in 2019 amid mounting losses and stiff competition from supermarkets

Mothercare also announced that Daniel Le Vasconte would become the next CEO, making him the first person to hold the position since Mark Newton-Jones in 2020, just days after the group closed all of its stores in the UK.

Le Visconte recently completed a three-year stint overseeing a range of Abercrombie & Fitch brands, including Hollister and Gilly Hicks, across Europe, the Middle East and Asia.

Prior to that, he held similar positions at shoe manufacturers Dr. Martens and Wolverine Worldwide, as well as holding senior positions at skateboarding apparel retailer Vans.

Announcing the appointment, Athey said Le Vésconte’s extensive experience in the direct-to-consumer, wholesale and licensing industries will be a great asset to the team and me as we seek to restore critical mass and strengthen the Mothercare brand. conquer worldwide. Let’s focus on running.

The Watford-based company has had a great few years with its UK division, which came under administration in 2019 amid mounting losses and stiff competition from supermarket chains.

All of the group’s UK outlets were closed, with the loss of 2,500 jobs, but trade has since recovered relatively well, with sales in India and Malaysia now above pre-pandemic levels.

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It acknowledged that inflation and consumer uncertainty will impact its business for some time, but said demographic trends and a greater focus on customer value will provide “a degree of isolation in these uncertain times.”

Mothercare shares were flat at 6.6 pence Thursday afternoon, though their value has fallen by nearly two-thirds over the past 12 months.

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Source: www.dailymail.co.uk

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