Good morning, it's Paul here.
I updated yesterday's article in the evening with new sections. Here is the link.
There is very limited time available today, but I'll do what I can.
Mothercare (LON:MTC)
Share price: 70p (down 16.2% today)
No. shares: 170.9m
Market cap: £119.6m
Half year results - for the 28 weeks to 7 Oct 2017.
The company calls itself;
the leading global retailer for parents and young children
I don't like the PR spin at the start of the announcement, which trumpets;
Continued transformation of the brand, converting into positive UK like-for-likes set against a challenging consumer backdrop
That's just meaningless, as it tries to sound positive, when the figures are actually poor. I'd rather not have a heading, if it's just an attempt to gloss over poor results. People aren't fooled anyway, as you can see from the 16% drop in share price, so what's the point?
UK LFL sales are indeed positive, at +2.5%, but that doesn't seem to have been enough to absorb cost pressures. The adjusted UK loss was -£9.6m, a deterioration from -£8.8m in H1 of last year.
International (the only decent part of the business, in terms of profitability), saw a sharp fall in LFL sales, of -7.7% in local currency. That's not good at all. Adjusted profit fell from £20.8m in H1 last year, to £14.9m in H1 this year.
Overall, the group couldn't even reach breakeven on an adjusted (i.e. favourable method of calculation) basis, with an adjusted loss of -£0.7m. There were £16.1m of adjustments (i.e. ignored costs) in reaching that figure. The list of things they have classified as adjustments look very aggressive to me - many are just normal costs of running a business, in my opinion (e.g. restructuring warehouses & retail sites, refinancing costs, etc). So in reality, the business is loss-making.
Recent trading - the UK market is softening, which to be fair, lots of retailers are saying at the moment, and this is also confirmed by poor recent economic statistics;
"Towards the end of the reporting period, and in subsequent weeks, we have seen a softening in the UK market with lower footfall and spend which is consistent with recent industry reports. Not-withstanding this uncertain consumer backdrop, the Mothercare brand, whilst not immune, is in…
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