Mothercare PLC on Monday said it swung to a first-half loss as revenue fell due to ongoing uncertainty in Middle Eastern consumer behaviour.
Mothercare is a Watford, England-based company specialising in clothes and other products for newborn babies and children.
In the six months to September 28, Mothercare swung to a pretax loss of £1.8 million, from profit of £2.0 million a year prior.
Revenue fell by 28% to £21.0 million from £29.0 million a year prior.
The company said like last year, that no dividend would be paid for the period.
Mothercare said it had been impacted by a 21% fall in global retail sales by franchise partners to £137.2 million from £121.2 million year-on-year.
It said conditions in the Middle Eastern markets ‘remains challenging’ due to ‘evolving customer behaviour, pursuant to ongoing fiscal and legislative changes’.
It also said sales were hit by the need for franchise partners to clear old inventory.
The company said its new £30 million joint venture with Reliance Brands Holding UK Ltd in South Asia supports deleveraging the balance sheet and ‘allows us to wholly focus upon restoring critical mass’.
Mothercare said it approaches 2025 with a ‘renewed and growing sense of confidence’ but remains cautious in the shorter-term because of the Middle East.
Chair Clive Whiley said: ‘We have immediately utilised this new India joint venture and refinancing as a springboard for a deleveraged 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.
‘Our results continue to reflect the impact of the continuing uncertainty on our franchise partners’ operations in the Middle East. We are now focused upon restoring critical mass alongside delivering our remaining core objectives,’ he said.
Shares in Mothercare were up 16% to 4.80 pence in London on Monday morning. It had been down 3.6% in earlier trade.
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