Mothercare, the UK retail chain specialising in clothes and other goods for babies and young children, has blamed stock problems for a big drop in full-year profits.

The company saw its costs leap more than 50% to �23.2m from �15.7m as a switch to a new distribution warehouse caused chaos in the firm's supply lines, delaying restocking and costing a further �4.1m for extra space.

The result was a pre-tax profit in the year to March which slid to �4.2m from �10.2m last year, while total sales rose by only 1.9% to �426.9m.

The figures encouraged investors to sell Mothercare shares, and by Thursday lunchtime they were 4 pence lower at 236p.

Looking to the future

Sales have still been down about 2% over the past two months, but Mothercare said it believed the problems were behind it.

The booming performance this time last year was making sales look worse than they were, chief executive Chris Martin said.

"We are still trying to build up customer confidence after the difficulties we experienced in the last seven months with the new warehouse," he said.

"We're confident we will be back on track in the second half."