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Mothercare issues ‘transformation plan’ update

Contingency plans activated to deal with challenges currently being faced due to COVID-19.

Mothercare has today (March 30) issued an update on its transformation plan, saying that it continues to make ‘significant’ progress.

The statement confirmed the company has substantially completed its transition to refocus the group on its core competencies of brand management and design, development and sourcing of product to grow the Mothercare business with its global franchise partners.

As with all businesses, the impact of COVID-19 around the globe has been having direct consequences, in particular given the disruption to both its franchise partners’ and suppliers’ businesses and operations.

UK government support for furloughed workers has been enacted for around 430 Boots Mini Club retail colleagues, although the group warned of incremental operating costs.

A material impact will also be felt on Mothercare’s short-term revenues due to the challenges franchise partners are facing. However, the company has said that the experience it gained as a result of the controlled supply shock that was exerted on the business at the time of the administration of Mothercare UK and related store closures last November is proving invaluable.

Meanwhile, although the finalising of the contractual arrangements with Boots UK to become the exclusive franchisee of the Mothercare brand for the UK remain on track, there have been some delays as a result of the operational priorities forces upon both businesses.

The anticipation is 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.

“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,” said Clive Whiley, chairman of Mothercare. “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.”

Clive continued: “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.

“Finally, I would like to thank our colleagues, franchise partners, manufacturing partners, lenders and all stakeholders for their continued support in these most extraordinary of times.”

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