Business Reloaded

Two more profit warnings have hit the press – This time it is Clinton Cards and Mothercare

The Telegraph article opens by saying that shares in Clinton Cards and Mothercare fell sharply on Thursday after they became the latest retailers to say that the snow had hit sales over Christmas.

Clinton Cards, which also runs the Birthdays chain, said that pre-tax profit over the year to July 31 will be “significantly lower” than market expectations. This follows a decline in like-for-like sales of 2pc over the five weeks to January 2. Don Lewin, the retailer’s chairman, described the sales drop-off as “very disappointing”. House broker Numis Securities slashed Clinton’s full-year profit forecast by almost 50pc – from £13.2m to £7m

Ben Gordon, the Mothercare’s chief executive, said: “In the UK, after a strong start to the quarter, sales were impacted significantly by the adverse winter weather conditions which caused widespread disruption, particularly in our out of town stores… We expect group underlying profit before taxation for the full year to be below current market expectations.”

Really guys? It is all about the weather is it?

If these retailers are to be believed then this year, because of the snow and recession, the general pubic cut down on the number of Christmas cards that would be sent. Also, we are being asked to believe that another focus for weather-related-cutbacks has been the most precious family member – the baby.

Well, if we take a little walk down the high street we quickly find that not everyone is telling the same story as we hear that Majestic Wine beats snow with sales rise

In a light-hearted swipe at the chains that have said that the weather prevented their customers from venturing out, Mr Lewis said: “I would like to thank our loyal customers for battling through December’s dreadful weather conditions to purchase their wine from Majestic.”

The heavy snow on what is traditionally Majestic’s busiest time of the year – the Saturday before Christmas – meant that sales were halved that day, compared with the year before. However, Majestic recovered the lost sales in the days directly before Christmas. “The Tuesday, Wednesday and Thursday of that week were our busiest days,” Mr Lewis said.

So, Majestic was also affected by the snow yet, when conditions improved, the shoppers returned. Clearly this didn’t happen at Clinton Cards or Mothercare. The only rational conclusion I can see is that shoppers wanted to shop at Majestic because they were attracted to the product and service offering whereas Clinton Cards and Mothercare are not presenting a compelling offering to the consumer.

It would appear that Mr Lewin and Mr Gordon want us to believe that the nation’s reaction to the bad weather was to cut back on baby toys & Christmas cards and spend more on champagne.

Are you trying to pull the wool over the eyes of your investors or do you seriously believe that you don’t need take responsibility for your poor performance?