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Mothercare forecasts small annual operating profit, even as sales slump
StockMarketWire.com
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Infant merchandise retailer Mothercare said it expected to report a small underlying operating profit for the full year, even as its sales slumped 40%.
The company had previously forecast a small loss at the underlying earnings before interest, tax, depreciation and amortisation (EBITDA) level for the year through 27 March.
Net worldwide franchisee retail sales had dropped to £326 million, down from £542 million year-on-year.
Mothercare said the fall reflected the impact of Covid-19 in various global markets, which had been offset by cost cutting.
'Whilst we performed broadly in line with our expectations in the final period of the year, we now expect to report a small EBITDA profit, before adjusting items, for the year ended 27 March 2021,' Mothercare said.
"However we are not immune to the evolving Covid-19 impacts on our franchisees' operations country by country."
Mothercare said it had 'significantly' cut its net debt to £12.1 million by year end.
'The global outlook remains uncertain with the continued impact of Covid-19 being felt around the world but over 80% of our franchise partners' global retail locations are now open, which points towards recovery in their sales and consequently our revenues,' it said.
The company said the 'steady state' operation of its retail franchise operations in more normal circumstances could return to annual operating profits of £15 million in future years.
'The further planned reduction in overheads and the continuing implementation of the asset light model will also support improving cash generation for the business,' it added.
Story provided by StockMarketWire.com
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