Mothercare's profits tank as decision to leave Russia costs retailer millions in sales - Tipblogg

Mothercare’s profits tank as decision to leave Russia costs retailer millions in sales

Mothercare names new CEO as retailer’s profits tank by nearly 90% after Russia exit costs millions in sales

  • The maternity merchandise retailer has slumped to a £0.4m half-year revenue
  • Russia beforehand offered 20 to 25% of Mothercare’s international retail sales
  • Daniel Le Vesconte has been introduced as the agency’s subsequent chief government 

Mothercare has narrowly averted a loss after taking a major hit from exiting the Russian market in the aftermath of the invasion of Ukraine.

The maternity merchandise retailer slumped to a £0.4million revenue in the six months ending 24 September, in opposition to £3.6million in the equal interval final yr.

Mothercare’s decision to droop all operations in Russia in early March was vital, on condition that the nation offered 20 to 25 per cent of worldwide retail sales.

Earnings: Maternity products retailer Mothercare slumped to a £0.4million profit in the six months ending 24 September, against £3.6million in the equivalent period last year

Earnings: Maternity merchandise retailer Mothercare slumped to a £0.4million revenue in the six months ending 24 September, in opposition to £3.6million in the equal interval final yr

When discounting the affect attributable to the misplaced sales from this market, worldwide retail orders by the group’s franchise companions elevated by 15 per cent, thanks partly to a stronger efficiency at British excessive avenue large Boots. 

Instead, whole revenues declined by 12 per cent to £162.1million over the interval, whereas on-line orders plummeted by round 1 / 4 to £13.1million.

Outside of Russia and the UK, Mothercare famous a ‘tougher’ market in the Middle East, particularly in the United Arab Emirates and Saudi Arabia.

Within the latter territory, the corporate blamed weak demand on a brand new sales tax, legal guidelines mandating employers to rent extra Saudis in their workforce and loosening restrictions on social actions. 

Chairman Clive Whiley mentioned: ‘Our instant precedence now stays to assist our franchise companions as we collectively navigate out of this suppressed demand interval, recuperate from provide chain disruptions and rebuild their retailer footfall while rising their digital sales.

‘This inevitably signifies that a return to pre-pandemic ranges of buying and selling is taking time; nevertheless, it will in the end profit each our personal enterprise and our franchise companions’ companies in the long run.’

Mothercare additionally introduced that Daniel Le Vesconte would turn into its subsequent chief government, making him the primary particular person to maintain the place since Mark Newton-Jones left in 2020, simply days after the group closed all its UK shops.

Le Vesconte not too long ago completed a three-year tenure overseeing the Abercrombie and Fitch set of manufacturers, which embrace Hollister and Gilly Hicks, throughout Europe, the Middle East and Asia.

Prior to that, he held related posts at footwear producers Dr Martens and Wolverine Worldwide and in addition occupied senior positions at skateboarding attire vendor Vans. 

Revealing the appointment, Whiley mentioned Le Vesconte’s ‘intensive expertise in the retail direct-to-consumer, wholesale and licensing sector shall be an amazing asset to the staff and me as we focus upon restoring crucial mass and driving the Mothercare model globally’.

The Watford-based agency has endured a torrid few years, culminating in its UK division falling into administration in 2019 in the face of hefty competitors from grocery store chains and mounting losses.

All the group’s British shops had been shut, with the lack of 2,500 jobs, but the group’s worldwide operations have performed comparatively higher, with sales in India and Malaysia now forward of their pre-pandemic ranges. 

It admitted that inflation and shopper uncertainty will affect its buying and selling in the meanwhile however mentioned demographic tendencies and an elevated deal with buyer worth will ‘present a level of insulation in these unsure instances.’ 

Mothercare shares remained flat at 6.6p on Thursday morning. 

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