Maternity specialist Mothercare has disclosed strong interim results and unveiled plans to take advantage of property market conditions to reshape key parts of its estate.
The retailer reported underlying group profit before tax up 11.1% to £10m on sales up 7.9% to £387.3m. Like-for-likes climbed 4% in the UK and 1% internationally.
Following completion of the first phase of its property strategy, Mothercare will now exploit the fact that 50% of its leases expire within the next three years and a weak property market to open parenting centres, rationalise the high street chain and open “landmark” shops.
Parenting centres, offering the full Mothercare and stablemate Early Learning Centre range, at present account for 40% of UK store space and 65% of profit.
Another 31 will be opened over three years, including 10 in the current year, and the intention is to have 120 altogether. “In the current property market and with the destination appeal of our two brands we are able to obtain advantageous lease terms and enter key catchments that have previously been difficult to access profitably,” the retailer said.
The retailer will address 90 “lower profit” high street shops as leases expire. Mothercare said: “We plan to move these stores to more profitable out-of-town locations, seek to renegotiate rentals or, if this can’t be achieved, close these stores.”
Mothercare has also identified 12 locations for “landmark” stores in high footfall locations such as city centres and shopping malls.
The latest phase of Mothercare’s property strategy is expected to deliver £10m of benefits a year by 2012, in addition to the £5m per year already identified in the first phase.
Mothercare chief executive Ben Gordon said: “With the strength of our two global brands, our rapidly growing international platform, a reducing UK cost base and debt-free business, we are well placed as we enter the important second half.”