Mothercare boss Chris Martin paid the price for the firm's continuing slump today as the group warned it expected to report a half-year loss.

The mums and toddlers business said Mr Martin was leaving as chief executive with immediate effect and the search for a successor had already begun.

The departure came as Mothercare revealed sales had dived in recent weeks, primarily across its 182 High Street stores.

Total sales in the 14 weeks to July 12 were down 2.7 per cent with a 3.1 per cent slide seen on a like-for-like basis after a poor June. Margins were 0.5 per cent below a year ago, due to the hangover from teething problems at a new warehouse in Northamptonshire.

Start-up problems at the distribution site last summer drastically reduced stock availability in the run-up to the Christmas season.

Pre-tax losses in the first quarter to June 21 came in at £5.4 million, higher than expected and down from profits of £2.3 million last year.

Mothercare said: "The company expects the remainder of the first half will continue to be loss-making."

The company had been making a turnaround under Mr Martin until the problems at Daventry, which sent stock availability tumbling to 55 per cent.

A spokeswoman said: "Chris and the board no longer felt he was the right person to take the business forward. The trading issue has come on his watch and he felt the need to step aside and let someone else come in."

Mr Martin will be paid for the one-year remaining on his contract. Last year, he received a salary of £320,000.

The spokeswoman blamed the distraction of the World Cup and Golden Jubilee for the sales slump but added baby daywear had not sold well.

Mothercare said it expected its trading performance to improve in the second half of the year.

Distribution costs were expected to come down in the third quarter and would be lower than last year in the final three months.