Profit warnings on the cards for Clinton and Mothercare

Two more Christmas retail casualties have emerged today. But are their woes entirely snow-related?

by Emma Haslett
Last Updated: 06 Nov 2012
More retail gloom today, this time from Mothercare and Clinton Cards: both have issued profit warnings after disappointing sales over the Christmas period. The former saw like-for-likes drop by almost 6% in the 12 weeks to January 1, while the latter suffered a more modest 2% fall for the five weeks to January. Predictably, both companies have blamed the cold snap, with Mothercare saying that out-of-town stores were hit particularly hard. Expect plenty more such complaints in the coming weeks...

As with HMV yesterday, Mothercare issued its trading update a week ahead of schedule, prompting its shares to slide by almost 5% this morning. Part of the problem was that it had to stop taking pre-Christmas orders much earlier than usual because the snow was causing a backlog that it was struggling to clear. There was some good news: its international arm, which has outlets in India and is planning to expand in Asia, Scandinavia, South America and Africa, saw sales rise by 17.6%. But even that’s not entirely positive; the company is facing stiff competition from supermarkets expanding into the same areas.

The situation at Clinton looks similarly glum. The gift retailer’s novelty bears apparently failed to attract much attention, with overall like-for-like sales in the second half of 2010 dropping by 2.9% on a year ago. Chairman Don Lewin said the company’s trying to turn things around with a ‘rebranding and redesign’ of its stores, as well as a new website which will be launched ‘soon’.

But while the cold snap clearly did harm retail sales across the board, it's perhaps a little disingenuous to blame it entirely. After all, some retailers appear to have done OK - notably John Lewis, along with specialists like Blacks and Majestic Wines. Perhaps in these two cases the respective business models are also partly to blame - Mothercare's reliance on the big out-of-town retail outlets, and Clinton's insistence on selling the same sickly-sweet kitten calendars it made its name from during the 1990s...

Either way, it’s unlikely Clinton and Mothercare will be the last retailers to report disappointing Christmas sales in the next few weeks - or the last to blame it all on the snow.

Tags:
Finance Retail

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