Continued difficulties in Mothercare’s Middle Eastern markets pushed the retailer into the red in the first half of the year, it has been confirmed.
The firm slumped to an adjusted pre-tax loss of £1.4m in the six months to the end of September after having made a profit of £1.8m in the same period last year.
The retailer noted that worldwide sales fell by 12 per cent on last year, with the decline largely coming due to a sluggish sales environment in the Middle East.
“Performance in our Middle Eastern region, especially in our largest single market, remains challenging where the shape of our partner’s retail offering in the country continues to adapt to address evolving consumer behaviour, pursuant to ongoing fiscal and legislative changes,” Clive Whiley, chair of the firm said.
Mothercare also said it struggled as its franchise partners continued to clear out old inventory.
But Whiley pointed to a recently agreed £30m joint venture in south Asia with Reliance Brands, the largest private sector corporation in India.
The company noted that it had reduced its secured debt facilities to £8m, and received £16m from Reliance Brands. The new venture will cover Nepal, Sri Lanka, Bhutan and Bangladesh as well as India.
“We have immediately utilised this new India joint venture and refinancing as a springboard for a de-leveraged Mothercare to explore the full bandwidth of growth opportunities through connections with other businesses, the development of our branded product ranges and licensing within and beyond our existing perimeters,” Whiley added.
“We approach 2025 and beyond with a renewed and growing sense of confidence given the multiple opportunities ahead, notwithstanding our ongoing cautious shorter-term outlook, due to the continuing challenges facing our Middle East operations,” he said.