Mothercare plc (LON:MTC) reported an upturn in its struggling UK business but faced problems in its core international operation, hitting its shares.
The baby goods retailer said UK like-for-like sales rose 2.1% in the fourth quarter, helped by a 5.6% increase in online sales, which now make up 35% of total UK sales versus 30% last year.
But ongoing economic and currency headwinds continued to affect the international business, which has traditionally been stronger than the UK.
Retail sales in constant currency fell 9.7% with foreign exchange movements further affecting retail sales in actual currency, which dipped 10.8%.
Constant and actual currency sales dropped in all four regions.
Lower oil prices hit consumer sentiment in the Middle East, resulting in a significant decline in constant currency sales.
In Asia, weakening consumer confidence hit China in particular. Adverse currency movements affected Europe and Latin America.
Shop numbers rose in Latin America but store space, while space also dropped in Europe.
The group said it continued to see opportunities in Asia and the Middle East and increased space despite current economic conditions
It ended the quarter with 1,310 international stores and 170 UK shops.
Chief executive Mark Newton-Jones said the group still expected overall annual underlying profit to be in the range of current market expectations.
"The UK is responding well to our strategy with continued sales growth and improved margins.
"International continues to be impacted by adverse currency and weakening consumer confidence in some key markets as economic headwinds persist.
"In the year ahead, we expect to make further progress in the UK.
"However, our international markets are likely to remain challenging with the current trends in space, sales and currency continuing into the new financial year."
Shares in Mothercare slumped 17.8% to 155p.