Mothercare to open 150 overseas stores in 2011-12

Mother and baby products firm Mothercare said it would close over a quarter of its UK stores over the next two years as it responded to a 23 percent slump in year profit.

The firm, which issued a profit warning in January as sales falls at its core UK business offset rampant growth overseas, said on Wednesday it would transform its UK in-town store estate within two years by taking advantage of 120 lease expiries.

It said about 110 stores would be closed, while 40 would benefit from rent reductions by March 2013.

This would reduce occupancy costs by about 18 million pounds ($29.3 million), benefiting UK profit by at least 4-5 million pounds per annum from March 2013.

Mothercare made an underlying pretax profit of 28.5 million pounds in the year to March 26.

That compares with analysts' average forecast of about 28.3 million pounds, according to Thomson Reuters I/B/E/S data, and 37.2 million pounds made in 2009-10.

Mothercare, which currently trades from about 370 UK stores and over 890 overseas, said worldwide network sales increased 7.1 percent to 1.16 billion pounds.

International sales jumped 16.3 percent as the firm opened 166 new stores.

However, sales at UK stores open over a year fell 4 percent as Britons started to scrimp on spending for their children in the face of tough macro headwinds.

Mothercare, which is paying a total dividend of 18.3 pence, up 8.9 percent, said it was planning 150 overseas store openings in 2011-12 but expected trading to remain tough in the UK.

Shares in Mothercare, which have lost a quarter of their value over the last year, closed at 433.7 pence on Tuesday, valuing the business at 384 million pounds.