Mothercare names new CEO as retailer profit tanks by nearly 90% after exit from Russia costs millions in sales
- The maternity goods retailer has slumped to a half-year profit of £0.4m
- Russia previously provided 20-25% of Mothercare’s global retail sales
- Daniel Le Vesconte has been announced as the firm’s next CEO
Mothercare has narrowly avoided a loss after taking a significant hit by exiting the Russian market following the invasion of Ukraine.
The maternity products retailer slumped to a profit of £0.4m in the six months to September 24, compared with £3.6m in the equivalent period last year.
Mothercare’s decision to suspend all operations in Russia in early March was significant, given that the country provided 20 to 25 percent of global retail sales.
Profit: Maternity products retailer Mothercare slumped to £0.4 million in profit in the six months to September 24, down from £3.6 million in the equivalent period last year.
Factoring in the impact of lost sales from this market, global retail orders from the group’s franchise partners rose 15 percent, thanks in part to a stronger performance from UK giant Boots.
Instead, total revenue fell 12 per cent to £162.1m over the period, while online orders slumped by around a quarter to £13.1m.
Outside of Russia and the UK, Mothercare noted a ‘more challenging’ market in the Middle East, especially the United Arab Emirates and Saudi Arabia.
Within the latter territory, the company blamed weak demand for a new sales tax, laws that force employers to hire more Saudis into their workforce and relax restrictions on social activities.
Chairman Clive Whiley said: ‘Our immediate priority now remains to support our franchise partners as we emerge together from this period of suppressed demand, recover from supply chain disruptions and rebuild their store presence while increasing their sales. digital.
‘This inevitably means that a return to pre-pandemic levels of trade is taking time; however, this will ultimately benefit both our own business and the businesses of our franchise partners in the long term.”
Mothercare also announced that Daniel Le Vesconte would become its next chief executive, making him the first person to hold the role since Mark Newton-Jones left in 2020, just days after the group closed all of its stores. in the United Kingdom.
Le Vesconte recently completed a three-year tenure overseeing the Abercrombie and Fitch suite of brands, which includes 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 and also held senior positions at skatewear retailer Vans.
Unveiling the appointment, Whiley said, “Le Vesconte’s extensive experience in the direct-to-consumer, wholesale and licensing retail sectors will be a great asset to the team and me as we focus on restoring critical mass and driving Mothercare brand worldwide.
The Watford-based firm has endured a torrid few years, culminating in its UK division falling into management in 2019 amid stiff competition from supermarket chains and mounting losses.
All of the group’s British outlets closed, with the loss of 2,500 jobs, but the group’s international operations have performed comparatively better, with sales in India and Malaysia now above their pre-pandemic levels.
He conceded that inflation and consumer uncertainty will affect his trade for now, but said demographic trends and an increased focus on customer value “will provide a degree of insulation in these uncertain times.”
MotherCare Actions it remained flat at 6.6p Thursday morning.