Despite the challenges posed by Covid-19 and the suspension of operations in Russia, Mothercare remains optimistic about its future. In a recent trading update, the mother-and-child retail specialist expressed confidence that its underlying earnings for the fiscal year ending on March 26 will exceed market expectations. While the pandemic has presented difficulties, the company has made strides towards restoring pre-Covid levels of sales and is cautiously positive about what lies ahead.

The suspension of all business operations in Russia last month has undoubtedly had a negative impact on Mothercare’s bottom line. With 116 stores and the webstore affected, the closure is predicted to result in a £6 million loss. Nevertheless, Mothercare maintains its forecasts for EBITDA, anticipating figures in the range of £11.5 million to £12 million for the year, aided by £1.5 million in one-off benefits.

In spite of the significant impact of the pandemic, unaudited net worldwide franchisee retail sales reached £385 million, showing a notable 7% increase compared to the previous year. However, retail sales still fall short of expectations and are approximately 25% lower than total sales for similar territories in the year preceding the outbreak. Online retail sales accounted for 10% of overall sales, slightly lower than the previous year’s 12%, due to Covid-19 restrictions. However, Mothercare noted that online sales continue to outperform pre-pandemic levels.

A highlight for Mothercare has been the successful launch of its upgraded product range for SS22 in January. Initial feedback has been positive, despite ongoing challenges in certain territories due to Covid-19 restrictions and the need to clear inventory from previous seasons. While it is too early to determine the impact of these factors on retail sales, Chairman Clive Whiley believes that the upgraded clothing ranges offer a unique selling point compared to competitors.

Moving forward, Mothercare aims to achieve operating profit exceeding £10 million from its continuing franchise operations, excluding any contribution from the Russian business. The company is focused on accelerating growth in its existing and new markets, and remains resilient even in the face of additional challenges like the suspension of operations in Russia.

In conclusion, Mothercare remains optimistic about its future prospects, despite the ongoing impact of Covid-19 and the suspension of operations in Russia. The company has made progress in restoring sales and has received positive feedback on its upgraded product range. With a strong emphasis on differentiation and growth, Mothercare is determined to overcome challenges and continue thriving as a global franchising business.

Useful links:
BBC: Mothercare optimistic despite challenges caused by Covid-19
Retail Gazette: Mothercare expects to surpass market expectations