Sainsbury's chief executive Justin King has told ITV News that the chain's popular toys range is "new competition" for businesses like Mothercare, whose shares fell 30% today.
Mothercare shares ends day still down 30 percent - haven't recovered from early slump this morning
Shares in Mothercare fell by 30% today after the chain fell victim to fierce Christmas price wars.
Shares in the babycare products chain sank 126p to 294p after confidence in its turnaround plan was hit by today's profits warning.
Mothercare blamed a 9.9% plunge in UK sales on the "highly promotional" nature of the Christmas period and lower footfall.
Mothercare has seen UK sales fall as it lost out to rivals' cut-price deals.
The baby products retailer saw sales fall by 0.9 per cent in its first quarter to July 13 citing an "increasingly promotional" market as a key reason for the reduced demand for toys, home and travel products.
Despite the figures, chief executive Simon Calver said he was "encouraged by the improving positive feedback from our customers to the necessary changes in the UK, particularly to product innovation and new clothing ranges".
The group, which operates 1,116 franchise stores across 60 countries, saw more success in its international business with an 11.3 per cent growth in sales.
Mothercare has posted a 5.9 percent drop in like-for-like UK sales over the Christmas period.
The mother and baby retailer, which has over 1,300 stores worldwide including 269 in the UK, said its total UK sales also fell 12.9 percent, hitting the group's overall performance.
Chief Executive Simon Calver said in a statement, "We have made solid progress during Q3 [the third quarter], despite a challenging consumer backdrop for the UK and Eurozone".
"Our three-year transformation and growth plan remains on track," he added.
In the 13 weeks to 12th January, Mothercare's total group sales fell 7.4 percent.
Parenting retailer Mothercare has seen a bottom-line pre-tax loss of £102.9 million after a £55 million writedown on the value of the group's Early Learning Centre and nearly £10 million in the UK in restructuring costs.
After stripping out one-off costs such as the writedown on the ELC, underlying profits plunged 94% to just £1.6 million.
In the UK, Mothercare expects the consumer environment to remain difficult and reassured that it is "planning accordingly".
Simon Calver, chief executive of parenting retailer Mothercare has said he would be "ruthless" on costs after reporting £103 million loss today. Mr Calver, who came to Mothercare from internet movie rental firm Lovefilm, said:
We have a long way to go, and the plan to bring the UK business back to acceptable levels of profitability will take three years.
We need to invest in e-commerce, be ruthless with our non-store cost base and use our scale and growth worldwide to drive sourcing economies and pass these savings onto the customers to improve our value for money around the world.
The uphill challenge faced by the new boss of Mothercare was underlined today as a dismal UK performance dragged the parenting retailer to a £103 million loss.
The group saw like-for-like sales tumble 6.2% in the year to March 31 in the UK, where it plans to cut store numbers from 311 to 200 by 2015 in a bid to save £13 million a year.
Presenting his first set of results, Simon Calver, who joined at the end of April, said he would be "ruthless" on costs as he rolls out a three-year turnaround plan.
Mothercare's shares may have fallen 60% in the last year, however, they were up today by 4% after their announcement on shop closures. The shares are now trading up over 10% at 188p. City likes Mothercare's restructuring news, but will customers?
After the closures, Mothercare will have 200 stores - 95 out of town and 105 on the UK high street. The company aims to grow with 1000 stores created abroad. The retailer have not yet announced which stores will close in the UK.