Mothercare (LSE: MTC) reported a 3% drop in sales in a statement ahead of its Annual General Meeting. The company has just started the second year of a three-year turnaround plan and appears to be making progress on three of the four areas of focus.
International sales were up 11% as a result of 47 new stores and a 14% increase in franchised floor space, although this compares to management’s goal of 15%.
Despite online sales in the UK rising nearly 15%, overall UK sales were down 8% following the closing of 13 loss-making stores as CEO Simon Calver — in place just over a year now — tries to slim down the company’s domestic operations in order to regain profitability.
Of course, the marketplace for selling prams, cribs, and all-in-ones is a crowded one and competitors have been slashing prices which makes it that much harder to improve profits.
Mothercare’s shares are up nearly 130% in the past year as the market has smiled on the company’s efforts to shed stores and return to profit. However, the journey is not complete and investors will be looking to see the company continue making progress along its turnaround path as well as evidence that improving customer perception can translate to the bottom line.
While Mothercare is pursuing a less-is-more strategy there are plenty of growth opportunities out there for investors. If you are a growth-inclined investor, you’ll want to check out The Motley Fool’s favourite growth share for 2013.
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> Nate does not own shares in Mothercare.
