MOTHERCARE WARNS OF PRICE RISES

Baby and infant retailer Mothercare has warned that it may have to push prices by up to 5% next year following the 2016 sterling slump.

Chief executive Mark Newton-Jones said that he expected to raise shop prices by between 3% and 5% as a result of higher import costs. Around half of the brand's UK lines are sourced in non-sterling currencies, and as such will now be more expensive.

"After the vote to leave the European Union, the dollar was up by around 18%," Mark said. "We came to an agreement with our suppliers and managed to mitigate against around a third of that increase. We'll take some of the rest through costs, but the bulk of the difference will go to customers."

He added that the business would not be increasing prices before May, as it has already locked in prices through hedging and so is protected until then.

In its latest trading report, Mothercare reported a dip in UK year-on-year sales, which fell by 2.3% to £231.2m in the 28 weeks to 8 October. UK like-for-like sales also fell, by 0.7%.

Despite this, Mothercare claimed its turnaround remains on track, attributing the 'challenging' six-month period to unseasonable weather and disruptions at its warehouse. Overseas and online performed better, with international sales up 3.7% and internet and mobile business up by 6.9% and now representing 40% of the total business.

The company is currently in the second year of a turnaround plan that has seen it refurbish more than 90 of its UK stores, close others and upgrade its online presence.

>