Mothercare has issued an update on its transformation strategy announced in November 2019 and further to the update released in January 2020.
The company previously confirmed plans to become a profitable international franchise operation, generating revenues through an asset-light model operating in over 40 international territories.
However, as with all businesses, the Group is feeling the impact of Covid-19; in particular given the disruption to both its franchise partners’ and suppliers’ businesses and operations.
UK franchise arrangements
In December 2019, Mothercare entered into binding heads of terms for Boots to become the exclusive franchisee of the Mothercare brand for the UK. Although the company is on track to finalise contractual arrangements with Boots, there are inevitably some delays due to Covid-19.
The company anticipates the finalising of contractual arrangements will now take place in late spring. Expectations are that the wider Mothercare product offer will be available online and in Boots stores from late summer 2020.
Commenting is Clive Whiley, chairman of Mothercare. “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.”
Many of Mothercare’s UK head office staff are working from home.
Nevertheless, a number of retail personnel are unable to do so. Government support for furloughed workers has been enacted for around 430 Boots Mini-Club retail colleagues. However, this will still result in incremental operating costs for the Group. Mothercare plans to utilise tax reliefs and other forms of financial aid announced by the government when available.
Whiley continues: “At this time, we believe that our efforts should focus 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.”
