* Year underlying profit 37.1 million sterling vs forecast 37.2 million
* Dividend up 20.8 percent at 14.5 pence
* Says cautious for current year but "well placed"
(Adds further details)
By James Davey
LONDON, May 20 (Reuters) - Mothercare Plc, the British mother and baby products retailer, reported a 12.4 percent increase in its year profit on Wednesday, raised its dividend by a fifth and said it was well positioned for further growth.
"Given the uncertain consumer environment we are planning cautiously for 2009/10. However, we are well placed as we enter the new financial year," said Chief Executive Ben Gordon.
But he reiterated that gross margins will come under further pressure from the weakness of sterling.
Mothercare, which trades from 1,014 stores in 51 countries, said it made an underlying pretax profit of 37.1 million pounds ($57.4 million) for the year ended March 28.
This was in line with the average of analysts' forecasts of 37.2 million pounds, according to Reuters' Estimates, and up from the 33 million pounds made in the previous year.
Sales increased 6.9 percent to 723.6 million pounds, with UK like-for-like sales up 1.4 percent and sales from the international franchise business up 40.9 percent.
"This has been another strong performance from Mothercare group and as a result we have recommended a 20.8 percent increase in the total dividend (to 14.5 pence)," said Gordon.
Mothercare is debt free, ending the year with a net cash balance of 24.8 million pounds.
Many UK retailers are struggling as cash-strapped consumers rein in spending amid rising unemployment, falling house prices and fears of a long recession.
But Mothercare has bucked the trend as parents continue to spend money on their children even if they have stopped spending on themselves.
The firm is also benefiting from an aggressive international expansion, a fast-growing Internet business and the continuing integration of the the Early Learning Centre brand it purchased in 2007.
The group plans to open at least 100 overseas stores every year for the foreseeable future, focusing on the Middle East, Eastern Europe, China and India.
Shares in Mothercare have risen 6 percent over the last three months, underperforming the FTSE All Share General Retailers Index by 22 percent.
The share price closed on Tuesday at 422.5 pence, valuing the business at 370 million pounds. ($1=.6465 pounds) (Editing by Greg Mahlich)