Good news for Woolies and Mothercare

Woolworths said today that it should return to profit in the current financial year, despite falling sales at their stores and a "very challenging" Christmas.

Mothercare said strong trading over Christmas period left it on course to deliver profits near the top end of City expectations.

Woolworths did not provide festive trading figures, but said same-store sales for the 49 weeks to January 12 were down 3.2 per cent, with slower sales of electrical goods accounting for half the fall.

However, management said the division, comprising about 800 UK stores, would make a small profit, reversing a loss in the previous year. Total sales, including the business's entertainment wholesale arm selling CDs and DVDs to retailers, were up 11.2 per cent.

Mothercare, which acquired Early Learning Centre last year, reported UK like-for-like sales growth of 3.4 per cent in the 13 weeks to January 11, ahead of the trend seen over the previous six months.

Chief executive Ben Gordon said it was a strong performance but he was cautious about market conditions. Excluding internet and home delivery sales, Mothercare said like-for-like sales from stores were up 2.5 per cent in the third quarter resulting in a gain of 1.6 per cent for the first nine months of the financial year.