Mothercare posts full-year profit on turnaround plan

Baby goods retailer Mothercare Plc, which has been trying to revive its business in Britain, posted a full-year profit for the first time in five years as its turnaround plan made progress, sending its shares up as much as 10 percent.

Mothercare's British business has suffered heavy losses as margins eroded over the past few years, partly hurt by cheaper competition from rivals such as AB Foods' unit Primark and online retailers including Amazon.

"Its been a story about the reinvention of Mothercare in the UK," Chief Executive Mark Newton-Jones told Reuters, adding that the company has now refurbished more than 40 percent of its estate and is investing heavily online.

Two years into its turnaround plan, Newton-Jones said, Mothercare's British business is attracting a broader base of customers and no longer trying to compete with supermarkets at the lowest-cost end of the market.

He said it was instead increasing the quality of its offering and targeting an "aspirational" customer base.

Mothercare reported a profit before tax after exceptional items of 9.7 million pounds for the 52-week period ended March 26, the first full-year profit since 2011, compared with a loss of 13.1 million pounds a year earlier.

Sales at UK stores open more than a year rose 3.6 percent, with total UK sales up 0.3 percent to 459.7 million pounds.

However, concerns remain over Mothercare's overseas business, mainly due to currency swings, faltering consumer spending in China and weaker oil prices that have hurt demand in the Middle East.

Sales at international stores open more than a year were down 4.5 percent.

Despite the challenges faced in the international markets, Mothercare's international retail space grew 4.6 percent as it ended the year with 1,310 stores.

At 0833 GMT, shares were up 5.6 percent at 125.50 pence on the London Stock Exchange.