Mothercare launches new UK franchise with Boots

September 29, 2020

MOTHERCARE today said it was continuing to cut costs as it launches its new UK and Ireland franchise with Boots.

Over the last financial year, Mothercare said it transitioned the business to refocus on brand management and the design, development and sourcing of product ‎to support its international franchise partners. It is now serving 791 stores across 40 countries.

 
Mothercare has announced its full year results for the 52 week period to March 28 2020. Comparatives are based on the 53 weeks to March 30 2019.

The loss from continuing operations for the full year was £7.2 million, which compared with a £21.1 million loss the year before.

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Total profit for the year was £14.4 million, compared with a £97.0 million loss in the comparative period.

The administration of Mothercare UK has also been completed, including the transfer of brand rights and intellectual property into the group.

Mothercare said it had eliminated around £30 million of operating losses through the closure of the UK retail division.

Clive Whiley,the chairman of Mothercare, commented: “We have diligently managed our way through to mitigate the impact of the COVID-19 pandemic during this period of global crisis, and we emerge in better shape than we went into it.

“We continue to reduce costs and improve our efficiency. We are excited to launch our new UK and Ireland franchise with Boots, restoring the Mothercare brand to its home territory.

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“We have entered into a new 20 year franchise agreement with Alshaya, our largest partner. We have successfully rolled out our innovative, working capital light arrangements with our manufacturing and franchise partners.

“We are now singularly focused upon building Mothercare as a global brand, both in our existing territories and beyond. We are confident with these foundations now in place Mothercare can move forward as a profitable and cash generative international franchise business, generating revenues through an asset-light model in some 40 international territories.”

“This would not have been possible without the support of all of our stakeholders whom, on behalf of the board, I would like to thank for enabling us to get to this point. As a result, from today, Mothercare can look forward to a brighter and stable future once more.”

By Greg Wright

Source: Yorkshire Evening Post

Mothercare goods to be sold through Irish Boots stores

August 21, 2020

Babycare retailer Mothercare UK has finalised a deal with Boots to sell goods across the chain in time for the autumn season.

Mothercare announced a new business model following talks with its franchisee.

 
Under the terms of the deal with Boots the pharmacy chain will become Mothercare’s Ireland and UK franchise partner.

The agreement, which was first announced in December, allows for Mothercare clothing to be sold in all Boots shops across the two countries, while bigger items such as pushchairs and car seats will be sold in the larger Boots stores. The products will also be available to buy online.

The Boots deal had suffered a series of delays due to the coronavirus pandemic.

Mothercare – which last year put its UK stores into administration, closing all 79 of its shops – has also announced a new business model after talks with franchisees.

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It said the new franchise arrangements would ensure a “more sustainable and less capital-intensive business model”.

That model will see the group’s franchise partners pay for products directly to the manufacturers.

Shares in Mothercare jumped in morning trading yesterday, rising as much as 18pc at one stage yesterday before settling around 7pc higher in London.

As well as the 10-year Boots deal, Mothercare said it had also struck a new 20-year franchise arrangement with Alshaya Group, its main franchise partner.

But Mothercare added that it still expects to take a £10m (€11m) hit from the UK stores entering administration last November.

The administration left Mothercare refocused on simply providing branded products to retailers.

In June, the group was also dealt a blow when temporary boss Glyn Hughes said he did not want the job on a permanent basis.

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His departure saw Mothercare led by the chief operating officer and chief financial officer, under the eye of chairman Clive Whiley.

Mothercare Ireland was placed into liquidation in June with the loss of 197 jobs after the directors said they could no longer see a viable future for the business.

Prior to that the company – which is a separate entity to Mothercare UK – had operated 14 stores across Cork, Drogheda, Dublin, Dundalk, Galway, Limerick, Newbridge, Portlaoise, Sligo and Tralee.

The business had been operating in Ireland since 1992.

In 2018 sales in Ireland were €28.5m, generating a profit of €136,000.

By Ellie Donnelly

Source: Independent

Mothercare appoints Boots as its UK franchise partner

December 16, 2019

Mothercare products will continue to be sold in the UK – via new franchise partner Boots.

The nursery retail brand, which put its UK retail arm into administration last month, said today that it had appointed Boots as its franchise partner for this market.

 
The news comes days after Mothercare said its UK stores had not proved financially viable in an increasingly discount-driven market. At the same it said the only viable way for it to sell in this market would be via a franchisee – and that it was in ongoing discussions on the subject.

Today it unveiled the new exclusive partnership with Boots, which it says will offer significant opportunities to both Mothercare and Boots, owned by Walreens Boots Alliance.

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Boots will sell Mothercare-branded clothing, home, and travel equipment such as pushchairs and car seats both online via Boots.com and in its stores. The range will be available online from mid 2020 and in larger branches of Boots from late summer 2020. In time, Boots will also host Mothercare shops within its stores.

An initial agreement has been signed, with final details expected to be in place in the next quarter. The partnership will run for an initial five years and is organised on similar terms to Mothercare’s existing international franchises.

Mark Newton-Jones, chief executive of Mothercare, said: “I am delighted to announced that we have taken our long-standing partnership with Boots to this next stage. In Boots, another much loved British heritage brand, we believe that Mothercare has found the right home in the UK. Boots is at the heart of one of the largest healthcare businesses in the world, and Mothercare will fit in as the specialist brand for parents and young children in both Boots stores and online. We know the team at Boots well from our successful Mini Club partnership which has been established over many years and we now look forward to working in an even stronger collaboration with the Boots team for the future.

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“Today’s announcement is fantastic news for the brand and the millions of Mothercare customers across the UK. It is also great news for Mothercare and our wider group of stakeholders after what has been a tough period. This partnership between Mothercare and Boots UK brings certainty and scale to our continuing group. These are exciting times as we enter into these new arrangements with a partner of the scale, scope and stature of Boots.”

Boots, founded 170 years ago, currently sells from more than 2,400 stores in the UK and online via its website. It is a Leading retailer in IRUK Top500 research.

By Chloe Rigby

Source: Internet Retailing

Mothercare sales plunge by 13% in first half amidst restructuring

December 12, 2019

Mothercare ends first half of 2019 on the low. The British childrenswear company, immersed in a restructuring process, has dropped its sales by 13.2%, to 324.1 million pounds (426.1 million dollars) in the first half of its fiscal year. The company’s gross profit stood at 21.2 million pounds (27.7 million dollars), up 14% year-on-year.

 
“This has been an extraordinarily challenging period in Mothercare’s 58-year history, particularly for our committed, hard-working colleagues who have worked tirelessly to sustain our UK retail operation,” stated Mark Newton-Jones, chief executive officer of Mothercare, in a statement.

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“It was simply not financially viable to maintain the UK store estate and supporting infrastructure any longer without putting the whole Mothercare group at risk,” added the executive. In the first half, like-for-like sales of ​​Mothercare in the country dropped by 2%, while online sales increased by 68.9%. The total revenue of the group in the country reduced by 19.2%, to 131.8 million pounds (173.3 million dollars).

Mothercare sales dropped in the United Kingdom by 19% and in its international markets by 4%

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In its international markets, revenue fell by 4%, to 102.3 million pounds (134.5 million dollars). Like-for-like sales fell by 5.7%. Newton-Jones explained that, although closures in the United Kingdom had been a “very difficult decision”, it marks the end of the transformation of the group into a “cash generative and profitable business”.

“We believe that, without the financial and management burden of running a UK retail operation, we can singularly focus Mothercare on its global international franchise,” added Newton-Jones. The executive also stated that 130 million babies born every year across the world, compared to 700,000 in the United Kingdom.

Source: The MDS

Mothercare goes into administration putting thousands of UK jobs at risk

November 6, 2019

MOTHERCARE is expected to plunge into administration within the next 48 hours putting 2,500 jobs and 79 stores in the UK at risk.

The loss-making baby and maternity-wear seller, which was founded in 1961, has today revealed plans to line-up administrators after failing to turn around poor performance.

 
Mothercare’s stores and website are trading as usual for now, but once appointed, administrators will decide whether or not to axe shops and jobs while they either search for a buyer or wind the company down.

Shoppers with gift cards should consider spending them while they still can, while those planning to return items should also do so sooner rather than later.

It’s unclear what will happen to those with credit agreements but you’ll likely have to continue making repayments even if the firm goes into administration.

The Mothercare Group has more than 1,000 stores internationally in over 40 countries, but it’s been trying to sell the UK business for some time now.

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Last year, Mothercare carried out what’s known as a “Company Voluntary Arrangement (CVA)” that saw it close 58 of its then 137 shops in the UK.

A small proportion of the closing stores came from Mothercare’s Childrens World division, which went into administration.

These closures were completed by March this year, and the business has been shutting other outlets over the past 12 months too.

Now, there are just 79 stores remaining with the group employing 500 full-time staff in the UK and 2,000 part-time workers.

Accountancy firm KPMG had been brought in to look at all the options available to the Mothercare Group.

But Mothercare has now revealed its intention to appoint administrators.

In a statement Mothercare said: “Since May 2018, we have undertaken a root and branch review of the Group and Mothercare UK within it, including a number of discussions over the summer with potential partners regarding our UK Retail business.

“Through this process, it has become clear that the UK Retail operations of the Group, which today includes 79 stores, are not capable of returning to a level of structural profitability and returns that are sustainable for the Group as it currently stands and/or attractive enough for a third party partner to operate on an arm’s length basis.

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“Furthermore, the Company is unable to continue to satisfy the ongoing cash needs of Mothercare UK.

“These notices of intent to appoint administrators in respect of Mothercare UK and MBS are a necessary step in the restructuring and refinancing of the Group.”

Just a few months ago in March 2019, Mothercare sold its Early Learning Centre business to The Entertainer for £13.5million.

Despite this, the retailer has continued to struggle in the UK.

In the year to March 2019, the retailer recorded a loss before tax of £87.3million.

Internationally, the retailer is much more successful and turned a profit of £28.3million in the same period.

Salman Haqqi, personal finance expert at comparison site Money.co.uk, said: “It’s undoubtedly distressing news for employees of Mothercare and their families especially so close to Christmas.

“Now is the time to check what redundancy rights you have and dig out any income or mortgage protection policies you hold just in case.”

Worried staff can contact the Money Advice Service for free on 0800 138 7777.

Back in April, Debenhams fell into administration with 50 stores to close after Mike Ashley’s rescue plan failed.

And in July, struggling shoe shop Office said it “could close branches as part of restructuring plans”.

Meanwhile, last month, the owner of hairdressing chain Supercuts went into administration putting 1,200 jobs at risk.

By Jacob Dirnhuber

Source: The Sun

Mothercare Ireland is revamping its online store as footfall shrinks

October 2, 2019

NURSERY AND CHILDCARE retailer Mothercare Ireland is preparing a major revamp of its e-commerce offering as it grapples with declining footfall in physical stores.

The Irish franchise, which operates separately to the UK business, will roll out a new-look website in 2020 and is investing hundreds of thousands of euro to improve how its back-end systems manage stock.

 
Speaking to Fora, Mothercare Ireland’s commercial director, Ben Ward – whose father established the franchise here in 1992 – said this will give the retailer the scope to provide a better online experience and introduce new services.

“We’ve had the same basic proposition as a front-end for the last six or seven years. It’s very much a Band-Aid solution at this stage,” Ward said.

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As well as providing an easier-to-navigate website, the company will launch additional services for customers including a reserve-and-collect option, in addition to its existing click-and-collect service and installed payment plans via Adyen-Klarna.

“It’s removing barriers where people might not have purchased from us online and I think it’s us offering as good a proposition as we can,” Ward said.

The revamp will be completed by the end of January 2020 when the new year sales have ended.

Retail parks

Mothercare, which sells a range of products including clothing, toys and nursery furniture across 14 locations, has recorded a 6% decline in annual footfall. Ward said there is still value in running bricks-and-mortar outlets.

“You need them because people still like to come in and get advice, they still like to come in and touch and feel the product. For a lot parents, all these hundreds of new products, you’re looking at them for the first time,” he said, noting that the Irish franchise has provided in-store demos and personal shopping services for several years.

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Due to the changing retail landscape, Mothercare is looking to migrate from city-centre locations and into out-of-town retail parks.

Earlier this year, it opened a 6,000 sq ft store in Galway’s Wellpark Retail Park after closing its Eyre Square Shopping Centre branch.

“Retail parks is the best format for us in terms of parking for the customer and being able to arrange everything under one roof as opposed to city-centre locations,” Ward said.

Though there are no new leases being actively negotiated, Mothercare Ireland is open to new locations “providing the demographics and the commercials are right”.

BY CONOR MCMAHON

Source: Fora

Mothercare kicks off talks to offload struggling UK arm

July 27, 2019

Mothercare is in talks to sell or separate its UK store operations months after striking a deal with creditors that secured the struggling retailer’s survival.

Sky News has learnt that Mothercare has kicked off negotiations with ‎third parties about a sale or franchising agreement for its British shops.

 
The intention to pursue some form of transaction is expected to be confirmed in a trading update scheduled for Friday morning, sources said.

If completed, a deal would mark a watershed for the UK’s best-known maternity and baby goods chain, which has been struggling to improve its fortunes in a brutal high street environment.

Mothercare traces its roots to its first store in Surrey, which opened in 1961.

Insiders said on Thursday evening that a deal to offload Mothercare’s remaining 79 UK stores, which represent the only national franchise now owned by the company, was not guaranteed.

The trading update will come as the company also secures the support of its lenders to waive covenant tests and defer a number of debt repayment milestones agreed as part of an earlier refinancing.

That consent from Barclays and HSBC is also expected to be confirmed in Friday’s stock exchange announcement.

Mothercare has been steadily transforming itself into an international franchising group, and now trades from roughly 1,000 stores in about 50 countries.

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Last year, it was forced to turn to creditors for support through a process called a company voluntary arrangement (CVA).

That mechanism resulted in the closure of 55 UK shops‎, and has since been followed by the £13.5m sale of the Early Learning Centre, the disposal of its head office and hundreds of job losses.

Mothercare raised £32.5m from investors last year from the sale of new shares, but now has a market value of less than £68m.

To add to the turmoil facing the company, it took the extraordinary step last year of ousting its highly regarded chief executive, Mark Newton-Jones, only to reinstate him less than six weeks later.

The identity of the parties with whom Mothercare is discussing the future of its UK business was unclear on Thursday evening.

Retail insiders said the process was being run by bankers at Numis Securities.

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Clive Whiley, Mothercare’s executive chairman, and Mr Newton-Jones are said to be open to exploring “all options” to maximise value for shareholders.

That could involve an outright sale of the UK business to a turnaround investor or an agreement with a third-party retailer or franchisee to ‎take on the estate.

Mothercare is far from alone in having been forced into radical steps to slash its store portfolio.

Virtually every name on the high street is implementing a restructuring plan of some kind as the shift towards digital channels and growing costs associated with physical stores inflict pain across the sector.

Most notably this year, Debenhams has been through a pre-pack administration, while Sir Philip Green’s Arcadia Group, which owns brands such as Topshop, only narrowly averted insolvency after a recent creditor vote.

In Debenhams’ case, lenders have just been asked for another £50m to help see the department store chain through to the crucial Christmas trading period.

Without a solution to take the financial burden of the struggling UK business ‎off its hands, Mothercare may have no alternative but to put it through another formal restructuring process.

Shares in the company closed on Thursday at 19.25p.

Mothercare declined to comment.

By Mark Kleinman, City editor

Source: Sky News

Mothercare sells Early Learning Centre to The Entertainer

March 14, 2019

Troubled retailer Mothercare is selling its Early Learning Centre business to toy chain The Entertainer as it ramps up turnaround efforts.

The group said it had agreed the deal for up to £13.5 million in a move to help slash its debt pile.

The Early Learning Centre (ELC) is run within 80 Mothercare stores in the UK, 400 stores internationally via franchise partners, and online.

The acquisition also includes ELC’s portfolio of toy brands, such as Happyland.

But Mothercare will retain around £6 million of Early Learning Centre stock to sell down.

It said the move will help it pay off around £17.5 million of debt over the next year, while it has also struck an “arm’s length” concession deal with The Entertainer for the supply of toys to stores and online.

This disposal of Early Learning Centre provides a further step towards eliminating our bank debt, and our new concession arrangements with The Entertainer will bring our customers an even stronger toys offer, both in stores and online

Mark Newton-Jones, Mothercare CEO

Mothercare – which is overhauling the business to boost its flagging fortunes – added that its swingeing store closure plan was ahead of schedule, with 57 stores set to shut by the end of March, taking its estate down to 80 from 137 last May.

Related: Mothercare woes deepen after Christmas sales plunge

Chief executive Mark Newton-Jones said: “We have made significant progress in recent months as we continue our strategic transformation to deliver a sustainable and profitable future for Mothercare.

“This disposal of Early Learning Centre provides a further step towards eliminating our bank debt, and our new concession arrangements with The Entertainer will bring our customers an even stronger toys offer, both in stores and online.”

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The group said the ELC deal comes as it lacks the scale and resources to develop the toy ranges, amid an “intensely competitive” market.

Gary Grant, founder and executive chairman of The Entertainer, said the firm would look to “bring new life” to the ELC brand.

He added: “By combining our experience with that of ELC’s passionate and capable partners around the world we look forward to re-invigorating the brand for generations to come.”

Source: Belfast Telegraph

Mothercare woes deepen after Christmas sales plunge

January 11, 2019

Mothercare says it is ahead of schedule in its store closure plan. By March 2019, it will have 79 stores, down from 137 in May 2018.

Mothercare’s problems continued over the key festive trading period as the retailer blamed a sharp fall in sales on a tough consumer backdrop and its decision to offer fewer discounts than a year earlier.

The struggling baby and maternity chain said sales at UK stores open for more than a year fell by 11.4% in the 13 weeks to 5 January, while online sales tumbled by 16.3%.

Mothercare blamed the drop in online sales on “lower website footfall”, fewer promotions and a smaller range of toys compared with the same time a year earlier.

The retailer said its store closure plan was ahead of schedule, with another 36 shops to close over the next three months. By the end of March, Mothercare will have just 79 shops in the UK, down from 137 in May last year.

Mark Newton-Jones, the chief executive, said Mothercare was focused on reducing debt and creating a “leaner” business.

“Whilst the UK continues to be challenging, in part as a result of our planned restructuring, we are still on course to deliver the necessary transformation,” he said. “The UK business will now operate with the discipline of a franchise, allowing the wider group to focus on the Mothercare brand and making it stronger globally.”

In the trading update for Mothercare’s third quarter, Newton-Jones said market conditions in the UK were expected to remain challenging and left the company’s profit guidance unchanged, with a pretax loss of about £13m expected for the full year to 24 March.

Neil Wilson, analyst at markets.com, said the sharp drop in sales was worrying: “Yes the transformation programme is under way with cost savings promised. But the sales figures appear very grim indeed, albeit generally the market has accepted it’s going to be very choppy sailing until land is sighted.”

He added that the although the international market is forecast to pick up but the UK outlook remains very cautious, with a new Mothercare profits warning possible.

Source: The Guardian