This fuelled expectations that the British owner of the Little Bird, Baby K and Blooming Marvellous brands will meet its target of being debt-free this year and drove its shares 20% higher to 24.3 pence on Friday.
The company also reported a loss before tax from continuing operations of 66.6 million pounds, compared with 94 million pounds a year earlier.
"The key message from today's FY19 results is solid transformational progress and delivery on the market's financial expectations," finnCap analysts said in a note.
Mothercare, which floated in 1972 and has been a mainstay of British shopping streets, said it had closed a third of its British stores over the past year, realising more than 25 million pounds in cost savings.
It had originally hoped to save 19 million pounds as a result of reductions in rent, store costs, and other overheads.
"We have achieved a huge amount this year, refinancing, restructuring and reorganising Mothercare to ensure a sustainable future ... The majority of that work is now done," Chief Executive Mark Newton-Jones said.
Mothercare, which faces intense competition from a new generation of web-based players, said it has increased online marketing spend in Britain through paid search and e-mail.
Online sales currently contribute to 45% of its annual sales in Britain and represent 5% of its global turnover, with a digital presence in 22 nations.
Mothercare said it would look to gain an online presence in four more countries this year.
"The next phase of our strategic transformation plan is to develop Mothercare as a global brand, maximising the opportunities we see across many international markets," Newton-Jones said.
Like-for-like sales in Britain, where it has been losing money for more than a decade, were down nearly 9%, while annual worldwide sales slipped 8% to 1.07 billion pounds.
(Reporting by Shashwat Awasthi in Bengaluru; editing by Patrick Graham and Alexander Smith)
By Shashwat Awasthi