Mothercare warns on annual results, shares tank

Mothercare Plc warned on full-year results, despite posting a modest increase in second-quarter sales, as British consumers reined in spending in a tough economy, sending the retailer's shares down to an eight-year low.

The mother-and-baby retail chain said revenue for the 12 weeks ended October 1 rose 5 per cent. A 16 per cent increase in retail sales in its international markets made up for weak sales in the United Kingdom.

The company, which trades from 1,322 stores - 353 stores in the UK and 969 overseas - said consumer morale was hurt particularly in the weeks following the riots in Britain.

"Against the backdrop of this weakening trend, we believe that the outlook for the UK business in the important second half has materially worsened and this is likely to lead to a disappointing performance for the year as a whole," the company said in a statement on Wednesday.

Pressure on British consumers was laid bare earlier in the day as top retailer Tesco Plc posted one of its biggest-ever quarterly falls in underlying sales while rival J Sainsbury Plc reported only modest growth.

Mothercare shares, which have lost nearly half their value over the start of the year, were down 39 per cent at 190 pence at 1000 GMT on the London Stock Exchange.