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Mothercare reports £97m loss but remains “confident” about Boots franchise partnership

Sadiyah Ismailjee
25 September 2020

Mothercare has reported a loss in its financial year to date, due to store closures affecting trade during the COVID-19 pandemic.

In the first 28 weeks of the 2021 financial year, the group's franchise partners, which were “severely affected by Covid-19 lockdowns”, reported a 39% year on year decline in retail sales to £145.8m.

Mothercare said the fall in sales was the result of store closures during the Coronavirus lockdowns, which were only partially offset by the performance in countries where the company has been able to continue trading through its online channels.

Since 23 September, the group’s total secured debt was £15m and more money is expected from its UK administrators.

In the year to 23 March 2020, total group revenue declined by 18% to £164m while the previous year £2m adjusted profit before tax turned into a £5m loss.

Although, Mothercare reported a total profit of £14.4m during the period from a loss of £97m in the previous year.

The company estimates 95% of its partners' global retail locations are now open, from a low point of 27% in April.

Last year, Mothercare, put its UK stores into administration with all 79 shops closing and 2,500 jobs lost. Since, the company has continued to trade online and through overseas stores.

Mothercare has also adopted a new operating model to focus the business on brand management. The new model allows franchise partners to pay for products directly to the manufacturing partners to improve working capital requirements.

Currently, Mothercare has 791 international franchise stores across 40 countries and its products are set to launch in Boots UK stores from next week.

Mothercare chairman, Clive Whiley said: “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.”

Recently, Mothercare launched a new franchise partnership deal with health and beauty retailer, Boots. The franchise deal will see Mothercare sell its branded clothing and goods including pushchairs and car seats in Boots' larger stores and online.

The Mothercare range will be available in over 400 Boots stores from 28 September.

The franchise deal will also see Boots opening dedicated Mothercare and premium nursery zones in 10 stores by 13 November.

Whiley added: “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.”

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