Mothercare says it currently expects to start selling its products through Boots stores and online towards the end of this summer.
The children’s clothing and equipment retailer-turned-brand is in the process of appointing Boots as its exclusive franchisee for the UK. The partnership was first announced after Mothercare’s UK division was put into administration in the autumn. At the time, Mothercare said that it was not able to sell profitably through its UK stores, which all closed as a result of the administration. Instead it embarked on a strategy of selling via franchise partners in more than 40 markets around the world. Initial terms were agreed with Boots in December to become Mothercare’s UK franchisee.
Today it said in an update on its transformation plan that work to finalise a five-year detailed contract with Boots was on track but had inevitably been delayed by the Covid-19 pandemic. “We currently anticipate that contractual arrangements will be finalised in late spring and that a wider Mothercare product offer will be available online and in Boots stores from late summer 2020,” it said in today’s announcement.
Mothercare also says that it expects a “material impact” to its short-term revenues as its franchise partners around the world are affected by store closures and as customers stay at home.
It added: “The experience we gained as a result of the controlled supply shock that was exerted upon the business at the time of the administration of Mothercare UK and related store closures last November, is proving invaluable. We are in close dialogue with our franchise partners and our manufacturing partners, as we seek to manage and mitigate the overall impact on both our and their businesses.”
The retailer said it had reduced its bank debt since raising £8.7m from investors in November but that it still had access to its £10m trade partner facility and was working to progress a £20m loan.
Mothercare chairman Clive Whiley said today: “In the current circumstances, we have activated our contingency plans to deal with the challenges that we and others are facing in the current global crisis, focusing on the well-being of our colleagues alongside our ongoing business and corporate liquidity. We continue to enjoy the support of our key stakeholders and financing partners and we are very grateful to them at this unprecedented time.
“We believe that the intrinsic value of our brand, the close contact fostered with our key stakeholders over the last two years and our seamless, deep understanding of the group’s new trading cash flow dynamics, honed over the last six months, will prove to be extremely valuable.
“At this time we believe that our efforts should be focused on helping to preserve the businesses of our franchise and manufacturing partners through even more collaborative ways of working, to ensure both the short term liquidity of our business together with our return to longer term profitability. We are already seeing the benefits of this approach being brought to bear.”
Image courtesy of Mothercare