Mothercare boss goes as growing pains continue

Mothercare boss Chris Martin paid the price for the retailer’s continuing slump today as the group warned it expected to report a loss at the half-year.

The mums and toddlers business said Mr Martin was leaving as chief executive ‘‘with immediate effect’’ and the search for a successor had already begun.

News of the departure came as Mothercare revealed that sales had dived in recent weeks, primarily across its 182 high street stores.

Total sales in the 14 weeks to July 12 were down 2.7% with a 3.1% slide seen on a like-for-like basis in the UK after a poor June.

Mothercare added that margins were 0.5% below a year ago due to the hangover from teething problems at a new warehouse in Daventry, Northamptonshire.

Start-up problems at the distribution site last summer drastically reduced stock availability in the run-up to the Christmas season.

Pre-tax losses in the first quarter to June 21 had come in at £5.4 million, higher than expected and down from profits of £2.3 million in 2001.

The Watford-based group added: ‘‘The company expects that the remainder of the first half will continue to be loss making.’’

Mothercare had been making a turnaround under Mr Martin until the problems at Daventry, which sent stock availability tumbling to 55%.

A spokeswoman said: ‘‘Chris and the board no longer felt he was the right person to take the business forward and we thank Chris for his efforts.

‘‘The trading issue has come on his watch and he felt the need to step aside and let someone else come in.’’

Mr Martin will be paid for the one-year remaining on his contract. Last year he received a salary of £320,000.

The spokeswoman blamed the distraction of the World Cup and Golden Jubilee for the sales slump but added baby daywear had not sold well.

Mothercare has been rolling out a new out-of-town format and said it expected its trading performance to improve in the second half of the year.

Distribution costs are expected to come down in the third quarter and would be lower than last year in the final three months, the group said.

But retail analyst Rowan Morgan of Peel Hunt said he now expected the retailer to make pre-tax losses for the year of around £4.5 million.

He added: ‘‘How you can’t make money out of a business like this with 750,000 pregnancies a year just beggars belief.

‘‘The real nightmare is that they are just not doing the sales. You begin to wonder where the rot stops.’’

Mothercare’s finance director Mark McMenemy will take up Mr Martin’s role on an interim basis.