British baby and maternity products retailer Mothercare reported a better than expected rise in full-year profits today.
But it also revealed a slow pace of recovery at the group's core UK business.
Mothercare's UK division, which accounts for 40% of group sales and is competing with a growing number of online retailers and supermarkets, made a loss of £21.7m sterling for the year, after a £24.7m loss a year earlier.
New CEO Simon Calver has embarked on a three-year turnaround plan, under which 56 UK stores have closed in the year to the end of March, ahead of a target of 50 closures.
As part of the plan Mothercare has also revamped its remaining UK stores, adding Costa Coffee concessions and play areas, and is trying to push online sales. Calver said that Mothercare would close 30 more UK stores in 2012/13, during which it expects to grow profits.
"The first year of any turnaround plan is challenging but we do see profit growth continuing this year and we're happy with the consensus out there," he said.
The company is expected to report an average pretax profit of £18m for the year to the end of March 2014, according to analysts. Many UK retailers are finding the going tough as consumers, whose spending generates about two-thirds of UK gross domestic product, fret over job security and a squeeze on incomes.
The group, which has 1,300 stores worldwide including 250 in Britain, reported underlying pretax profit of £8.3m for the year to April, up from £1.6m a year earlier and above the average £7.2m forecast.
Total group sales fell 7.8% to £749.4m, reflecting the closure of loss-making stores in Britain. Underlying profits at its international business rose a fifth to £42m, despite some weakness in Europe.
The company said its net debt rose 61% during the year to stand at £32.4m at the end of March.
