Mothercare, the UK's iconic retailer in all things baby and toddlers, is having it's cradle rocked.
This is a train wreck. At 170p Mothercare (MTC) is capitalised at £150 million. But this company is essentially worthless – just look at its balance sheet. My target price is 0.01p and I am being generous because I am in a good mood.
Away from the flat fortified wine of the Marks & Spencer (MKS) trading statement to the bubbling champagne and apple pie of the Mothercare (MTI) statement. Having driven shareholders to despair in Q3, along with the departure of CEO Simon Calver (appointed in April 2012), the Q4 Mothercare results did the reverse. The shares rose 14.6% to 187p. Bears did not know if they were coming or going and former bulls found themselves lifted out of the gutter to smell fresh air and coffee again.
The Christmas trading reports from the retailers do not make for pretty reading. There are some who simply cite consumer confidence (or lack of it) in austerity Britain. But I would suggest that there are far wider structural changes afoot, ones that make me wonder if some companies really have a raison d’etre at all going forward. If it did not exist already would anyone bother to establish Mothercare (MTC)? Somehow I rather doubt it. Certainly when it publishes its Christmas trading statement on Thursday it will be grim.
