LONDON, Nov 20 (Reuters) - Baby goods retailer Mothercare posted a small rise in first-half profit and said lower losses and improving sales in the United Kingdom provided early encouragement for its new turnaround plan.
While Mothercare's overseas business is profitable, fierce competition from supermarkets such as Tesco and Internet retailers like Amazon has hit it hard at home.
This has left the company with too many stores and not enough customers, and exposed a need to boost its online business and improve product ranges and brands.
In September, new boss Mark Newton-Jones tapped investors for 100 million pounds ($157 million) to fund more UK store closures and revamp others with video walls and iPads, with the aim of erasing losses by 2017 at a division which accounts for 60 percent of sales.
The firm is also pushing more full-price sales rather than discounts and has said most of its UK stores, which will be cut to 160 from 220 over the next three years, will switch to larger out-of-town formats that house more items and services.
On Thursday, the company said losses at its UK division narrowed slightly to 13.5 million pounds in the first 28 weeks to Oct. 11, while overall underlying group pretax profit rose to 3.3 million pounds from 2 million pounds a year ago.
Sales at UK stores open more than a year rose 1.5 percent, with fewer promotions helping keep gross margins flat after five years of decline. Its franchised international arm, which has 1,300 stores in 60 countries, saw underlying sales rise 4.9 percent with year-on-year profit flat at 25 million pounds.
"Pleased with progress, good first half, but it is very early days," Newton-Jones told Reuters.
Shares in Mothercare, down 45 percent from a year ago, were up 3.1 percent to 178.75 pence at 0818 GMT.
1 US dollar = 0.6389 British pound Reporting by Neil Maidment; editing by David Clarke