Mothercare PLC (LSE:MTC) shares surged almost 50% on Friday after the company reported a swing to statutory profit despite a drop in sales.
Statutory profit for the year to March sat at £3.3 million, the children's goods retailer reported on Friday, against a £0.1 million loss previously.
On an adjusted basis, operating profit climbed by 5% to £6.5 million, while net debt increased from £12.9 million to £14.9 million.
This was despite a 23% drop in group revenue to £56.2 million over the year, as franchise partner sales fell 13% to £280.8 million.
Geopolitical uncertainty hit the figure, Mothercare said, especially in the Middle East, which accounted for 41% of the company’s sales.
This meant many partners still needed to clear old inventory leftover from the Covid-19 pandemic, prompting Mothercare to warn sales would remain under pressure ahead.
Mothercare noted franchise partner sales over the first half of the current year had dipped from £137.3 million to £121.2 million as a result.
“We are now focused upon restoring critical mass alongside delivering our remaining core objectives,” chairman Clive Whiley commented.
“This is an exciting prospect for our partners, our colleagues and all our stakeholders alike as we finally leave behind the turmoil of recent years.”
Mothercare also highlighted consideration from a new joint venture with Reliance Brands UK covering its Asian markets and efforts to reduce debt facilities had de-leveraged the business, leaving it able to “move forward with confidence and invest appropriately”.
Shares jumped 47.1% to 5p on Friday.