Mothercare slumps to loss as Middle East markets continue to struggle

Mothercare has reported a slide into the red for the first half of the year, with difficulties in its Middle Eastern markets being a significant factor. The company recorded an adjusted pre-tax loss of £1.4m for the six months ending in September, a stark contrast to the £1.8m profit from the same period last year.

Global sales dropped by 12 per cent, attributed mainly to sluggish sales in the Middle East, as reported by City AM.

"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," said Clive Whiley, Mothercare's chair.

The retailer also faced challenges as franchise partners cleared out old stock. However, Whiley highlighted a positive development with the establishment of a £30m joint venture in South Asia with Reliance Brands, India's largest private sector corporation.

Mothercare has managed to reduce its secured debt facilities to £8m and has received £16m from Reliance Brands. This new partnership is set to encompass markets including Nepal, Sri Lanka, Bhutan, Bangladesh, and India.

Chief executive Daniel Whiley said the new India joint venture and refinancing had given the company a fresh start. "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.