Comment: Mothercare’s turnaround is making steady progress

Mothercare’s full-year update last week marked one year into chief executive Simon Calver’s three-year Transformation and Growth turnaround plan.

The former Lovefilm boss has made steady progress at Mothercare since taking the helm last April.

While he would be the first to admit that his plan to create a leaner structure, return the UK to profit by 2015, and drive international and multichannel growth is no walk in the park, his moves to create a new executive team, trim costs and expand overseas operations are steps in the right direction. Mothercare like-for-likes may still have been down 3.6% in the year, but that’s a vast improvement on the 6.2% slump in the previous 12 months.

Turning a profit in the UK will not be easy, and the City is divided on whether Mothercare can achieve this by 2015.

The move to shutter loss-making stores and renegotiate leases will help, but any restoration of profitability must be powered by sales.

To do this, Calver has rightly focused on price, and in the year astutely launched a value range for clothing, which has proved popular among shoppers who were used to Mothercare’s pricey products.

The retailer also hopes revamped stores will drive sales. Mothercare’s Edmonton store, which reopened last August, features a coffee shop and areas to hold mother and baby groups. However, with the format rolled out to only two further stores, it is unlikely to contribute any meaningful uplift to revenue just yet.

Online provides another opportunity to boost sales, and Calver has rolled out click-and-collect and launched an app. But web sales, disappointingly, were only up 4% in the year. Calver insisted a platform move in the first quarter was to blame, but there is clearly work to be done.

Overall, the turnaround seems to be on track. The challenge now is to keep momentum, and to communicate the changes effectively to all those parents who still view Mothercare as expensive and antiquated.