Mothercare pulls the plug on 111 more stores

The babywear retailer is cutting its total of UK stores from 311 to 200. Can its thriving international brood save the business at home?

by Dave Waller
Last Updated: 11 Apr 2013

It seems Mothercare's economic struggles are having the inevitable effect; ­ the group is closing 36 Mothercare sites and 75 Early Learning Centres over the next three years, after like-for-like sales in the UK fell 9.5% in the 12 weeks to the end of March. That's compared to a 3% drop in the previous quarter.

And it's not just the kids who will suffer: the move will also affect 730 jobs. And the company is also planning to slash UK head office payroll costs by up to 16%, which works out at around 90 roles.

Executive chairman Alan Parker said the changes will see the group transformed into a ‘lean, more competitive business’. In these dog-eat-dog times, where online rivals heighten the competition for scarce pounds (note Morrisons buying up in February), that’s just the sort of fighting talk you need to run a company flogging baby-grows and Sticklebricks.

Incoming CEO Simon Calver, the former Lovefilm boss, will be happy to see there’s a plan. The idea is to improve UK profits by £13m by March 2015, and the group is confident that the remaining 200 stores, comprising 95 out-of-town sites and 105 high street spots, will be profitable. Mothercare has already closed 62 stores in the current financial year ­– three Mothercare outlets and 59 Early Learning Centres – having secured a refinancing deal with its banks, which haveincreased lending from £80m to £90m.

But while stores in the UK are dying off in the grip of the consumer slow-down, their international cousins are running around free with a healthy glow. Mothercare operates 1,000 stores overseas, and international sales grew 18% in the fourth quarter. Even so, it's planning to augment its international expansion with the corporate equivalent of growth hormones, as a further boost to its turnaround plan.

With that and Calver's online expertise, which should help the group boost its e-commerce offering, Mothercare¹s surviving sprogs may stand a decent chance of growing up big and strong too…

Finance Retail

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