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 Kiddicare.com 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…