Mothercare PLC (LSE:MTC) reported increased profit in the first half despite a drop in sales as performance in the Middle East remained challenging.
In the 26 weeks to 23 September 2023, turnover fell to £29.0 million from £38.5 million the year before with international retail sales by franchise partners slipping 15% to £137.2 million from £162.1 million, the retailer said in a statement.
This reflected difficult trading conditions in the Middle East, which was down 20% on last year, with continuing operations excluding the Middle East down 6% at constant currency.
Mothercare said it is “acutely aware” of the pressure on franchise partners' profitability and the consequent need for them to reduce costs, which is likely to lead to further reductions in store numbers.
“We do not currently expect our combined efforts to offset fully this impact on the group results for the financial year to March 2024 and beyond,” the firm said in a statement.
Adjusted EBITDA improved 12% to £3.6 million from £3.2 million, reflecting tighter control of costs, while adjusted pre-tax profits increased 17% to £3.4 million from £2.9 million.
Net debt climbed to £15.8 million from £11.6 million the year prior, and Mothercare said it would continue to explore options to further mitigate the pension scheme current deficit of £35 million.