1400 Friday 11 January 2019

The UK retail sector has been struggling the last few years due to the popularity and ease of E-commerce. One of these companies is Mothercare (MTC.L). Since 2015 Mothercare has seen a constant decline in share price. Mothercare isn’t the only retailer to be struggling with its physical footprint. Businesses such as; Debenhams, New Look and House of Fraser are all closing stores to improve profitability. This is due to the consumer switching their spending habits to online retailer such as; Amazon, AO World and EBay.

Mothercare is to close numerous stores as part of a rescue plan, with 36 stores currently in transition for closing which will leave MTC.L with a total of 79 estates in the UK. This shake up has led to the loss of hundreds of jobs. To add, Mothercare are having issues with sales, 11% fall amid store closures and difficult consumer backdrop. Online sales have also taken a hit with a dive of 16.3% in the last quarter.

5 year chart

5 year chart

So what is the future for Mothercare? Chief executive Mark Newton-Jones has said “Whilst the UK continues to be challenging in part of a result of our planned restructuring, we are still on course to deliver the necessary transformation”. This could mean many things come to the end of March when they plan to have the 36 stores closed, he may plan to close more and cut more jobs in the process. You may also see discounts in store and online to boost revenue even though earlier in 2018 they made the decision to offer fewer discounts.  But if all fails we may could see a sale of the business. But I’m not sure Mike Ashley will buy this one.

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