Mothercare expects 'small' full-year profit despite sales drop

Maternity and babywear specialist Mothercare said Tuesday it expects “a small” profit for the financial year, despite a 40 percent drop in sales.

In a pre-closing trading update for the year ended March 27, the company said unaudited net worldwide sales dropped to 326 million pounds, compared to 542 million pounds a year earlier, as the pandemic took its toll on the business.

Despite that, the business said it expects “a small” EBITDA profit for the financial year, against previous guidance of a small loss.

Mothercare also managed to significantly reduce its net debt of 12.1 million pounds at the year end.

New asset-light business model

“Our performance in 2021 shows that whilst we are not immune to the impact of the pandemic on our franchise partners’ operations around the world, we have ended the year in a far stronger position than we started it,” said Mothercare chair Clive Whiley in a release.

“Our resilient performance and financial position bear out the robustness of the Mothercare business today, delivering what will be a positive if modest EBITDA result for the year. We enter FY22 as a conservatively financed, cash generative and profitable business.”

The company has undergone a major transformation in recent years. In August, Mothercare announced the launch of a “more sustainable and less capital-intensive” business model from the AW20 season. It came after the company put its UK business into administration in 2019 with all 79 of its stores closed.

In March, the company moved from The London Stock Exchange to the junior market, AIM, as part of its almost complete restructuring.

Looking added: “We expect 2022 to be a year of further progress and we can now focus upon developing our strategy and future plans to optimise the competencies and attributes of Mothercare over the next five years. That is an exciting prospect for all of our staff and stakeholders as we hopefully exit this most uncertain of times.”

Mothercare expects to release its preliminary results for the year to 27 March 2021 in late July.