Mothercare on track after UK improvement in fourth quarter

LONDON (Reuters) - British baby products retailer Mothercare said it would meet current annual profit forecasts after trading improved in its troublesome home market and overseas in its fourth quarter.

Shares in Mothercare have tanked some 60 percent since the firm warned in January full-year profit would reach only half of what analysts had expected, prompting its chief executive Simon Calver to quit just weeks later.

On Thursday the firm said sales at UK stores open over a year fell 0.3 percent in the 12 weeks to March 29, an improvement on a 4 percent decline in its third quarter.

Mothercare, which makes about 70 percent of its sales in Britain, has pushed to close underperforming British stores, revamp others and grow online to return the division to profit, but its efforts have struggled to make a difference in the face of fierce competition from internet rivals and supermarkets.

The firm said international sales in constant currency increased to 9.8 percent in the quarter, but were down 1.8 percent on a reported basis due to continued currency weakness.

The group, which named ex-Shop Direct boss Mark Newton-Jones as its interim chief executive last month, said it expected the UK environment to remain tough and the effects of currency devaluation overseas to persist into the new financial year.

According to Reuters data, analysts now expect Mothercare to post a pretax profit for the year to March 2014 of 8.3 million pounds, ahead of a restated 5.9 million posted a year earlier.

The firm, which has 1,441 stores worldwide, had aimed to make a profit on its loss-making British operations by 2015, but said in January that 2016 to 2017 was now more realistic.

Shares in Mothercare closed at 163.25 pence on Wednesday.

(Reporting by Neil Maidment; editing by Sarah Young)