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Mothercare downsizes head office and warehouse as it continues the shift from retailer to franchise business, while dealing with the effects of Covid-19

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Mothercare downsizes head office and warehouse as it continues the shift from retailer to franchise partner, while dealing with the effects of Covid-19

Mothercare is reducing the size of its head office and its warehouse as it continues its shift from retailer to franchise operation, selling in 40 international territories, while also dealing with the effects of Covid-19 on its business.

 

The brand is to move to a smaller head office in Weybridge, Surrey, in early August and is subletting part of its main Daventry warehouse as part of a plan to return to profitability.

 

These are the next steps in a transformation started last year as the brand started a shift away from being a retailer serving the parents and carers of babies and young children towards becoming a brand selling via franchise partners. The transformation started when it put its Mothercare UK arm into administration and closed its UK shops last November. Now it says that experience was invaluable in helping it to manage the impact of Covid-19 on both its business, and those of its franchise and manufacturing partners.

 

The business says that two-thirds of its franchise partners’ Mothercare shops are now open in line with local guidance in their different markets and it is now talking to franchise partners to establish a more sustainable and less capital-intensive way of operating in the future.

 

Mothercare is also finalising the contractual arrangements with Boots as its exclusive UK franchisee. According to its website, Boots is planning to start selling the full range of Mothercare-branded goods online from October, while items will also be available through its shops. Currently Boots sells a curated range of Mothercare items, including the Mini Club range, through a previously-existing partnership.

 

Mothercare’s search for a new chief executive continues. Interim chief executive Glyn Hughes is to step down at the end of June, and in the meantime the chief operating officer and chief financial officer will lead the business, overseen by chairman Clive Whiley.

 

Mothercare chairman Clive Whiley said: “I would like to thank our colleagues, franchise partners, manufacturing partners, lender and all stakeholders for their continued support in these most extraordinary of times. As a result of their support, we remain on track with the plans we set out at the end of March. We are finalising our arrangements with both our existing franchise partners and Boots as our new UK franchise partner and will make further announcements in due course. Our discussions with various other financing partners also continue constructively.

 

“We have carefully managed our business over the past three months, to mitigate the impact of the Covid-19 pandemic on our cash flows and liquidity during this period of global crisis which is reflected in our unchanged bank debt position since March. Whilst we have not been immune to temporary store closures in almost all of our territories over the period, I am pleased that we are seeing the reopening of our partners’ stores. At the same time, we continue to take action to reduce our cost base and address legacy issues, helping with our return to being a profitable and sustainable business.”

 

Currently Mothercare says its total secured debt comes to £18m, with more available to draw down.

 

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