Mothercare increases dividends after profits rise

Mother and baby specialist Mothercare today said its takeover of Early Learning Centre had delivered benefits "beyond expectation" as it posted a 12.4% hike in annual profits.

Mother and baby specialist Mothercare today said its takeover of Early Learning Centre had delivered benefits "beyond expectation" as it posted a 12.4% hike in annual profits.

The group said underlying profits rose to £37.1m (€42.17m), helped by like-for-like UK sales growth of 1.4% despite a "challenging market".

Mothercare said the integration of the Early Learning Centre (ELC), bought for £85m (€96.6m) in June 2007, was almost complete and had contributed to cost savings in the business.

A partnership with musician and presenter Myleene Klass for the Baby K range had been successful in the UK and internationally and Mothercare said the label is to be extended into its home and travel sectors.

The firm said its "In the Night Garden" home and travel products, produced in a licensing agreement with the BBC, were selling ahead of expectations.

Mothercare chief executive Ben Gordon said the "strong performance" meant a 20.8% hike in the total dividend payment to shareholders.

The move comes a day after high street giant Marks & Spencer said it would cut its total dividend by a third.

Mr Gordon added: "Given the uncertain consumer environment, we are planning cautiously for 2009/10, however we are well placed as we enter the new financial year, benefiting from our growing international platform, resilient multi-channel UK business, strong cash flow and debt free balance sheet."

He said the international franchise business had seen a record year, with profits up 47.9% to £13.9m (€15.8m) in the 12 months to March 28.

The division was said to be the "biggest single growth opportunity" for the group.

Mothercare now has 1,014 stores in 51 countries, with 609 of its outlets outside the UK. It plans to open 100 more international shops this year.

The most significant aspect of the integration of ELC was the inclusion of its ranges in Mothercare stores. ELC specialises in toys and games designed to enhance children's learning and creativity.

The group said its 84 ELC "inserts" performed at the top end of expectations through Christmas and have continued to perform well since then.

Mothercare said: "The success of the inserts is due to the increased footfall each brand brings to the other."

Cost savings from the integration of the two businesses include moving to a single management team and combining the back office functions.

The ELC warehouse was also moved to a new site next to the existing Mothercare warehouse in Daventry.

Mr Gordon said: "The integration of the Early Learning Centre is now largely complete and has delivered benefits beyond our expectations."

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