Mothercare yesterday said it had cut yearly losses by 80%, insisting that a string of cost-cutting measures had placed it on a “firmer footing”.
The group, which is jettisoning loss-making stores as part of a three-year restructuring plan, posted a pre-tax loss, after exceptionals, of £21.5 million more than £80m better than the same time last year.
Nonetheless, like-for-like sales in the UK fell by 3.6% to just under £500m during the year to the end of March.
Its larger international division, which trades from more than 1,000 stores in 60 countries, made up for the UK deficit with a 5.6% hike in sales to £728.7m.
Worldwide network revenues fell slightly to £1.223bn.
Chief executive Simon Calver said the company was improving the value it offered, introducing innovative products, and investing in better service for hard-pressed consumers.
He said customers were responding to the changes, though it remained “early days”.
Online sales increased 18.2% during the last quarter of the year, as the new internet platform and delivery options took effect.
During the year Mothercare closed 56 UK stores, a footprint reduction of 7.2%.
It now trades from 196 Mothercare outlets and 59 under the Early Learning Centre brand.
More closures are expected as the company works towards a 200-strong estate by 2015, complemented by a stronger web presence.
Mr Calver described his first year in charge as both exciting and challenging.
“I believe the work done over the last year has put Mothercare on a firmer footing, which I and all the great teams in the business look forward to building on in the years ahead,” he said.
Recent product launches have included its own value clothing range, as well as feeding and pushchair products under the Innosense and Xpedior brands.
Its ‘Little Bird’ range, which is backed by TV chef Jamie Oliver’s wife Jools, has been extended this year.
Cantor Fitzgerald analyst Kate Calvert said she was not convinced that the strategy would return the UK business to profit in 2015, warning of continuing difficulties for the retailer in a market dominated by online channels and the supermarkets.
“Management is undertaking this brand repositioning in challenging markets,” she said. “Competition is fierce, with most of Mothercare’s core product categories having been commoditised by pure online players and the food retailers.”
She believes Mothercare UK should reinvent itself as a social networking brand “at the heart of a mother’s community”.