UK: Mothercare chief steps up closures

Mothercare is set to close some of its stores.

Mothercare is set to close some of its stores. - Credit: PA

Mothercare’s new boss is to step up the retailer’s closure of loss-making stores as part of a £100 million strategy to revive the UK business.

Mark Newton-Jones wants to create a digitally-led business supported by a modern store estate, but admits this will require the purging of more shops.

The company, which owns the Early Learning Centre (ELC) brand, is planning a core UK estate of 110 out-of-town stores and 50 in-town sites, with closures being offset by the opening of approximately 15-20 new stores or by relocations to larger, better located premises.

Mothercare reduced its UK estate to 220 stores at the end of March after closing 153 loss-making stores over the last three financial years.

A refit programme is also being planned to reverse under-investment which has meant 80% of the group’s UK store portfolio has not been refurbished in the last seven to eight years. The new look will introduce digital screens and video walls, iPads, customer Wi-Fi and click and collect enhancements.

Mr Newton-Jones will pay for the overhaul by tapping City investors for £100 million in a rights issue, with the funds also going towards new systems and technology and reducing the company’s debt burden.

He said: “Our ambition is for Mothercare to become the leading global retailer for parents and young children. The support of our shareholders will allow us to deliver on this ambition.”

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Mothercare’s UK business made a loss of £26.3 million in its most recent financial year but this has been offset by its international business, where the company’s franchise partners operate around 1,500 stores in 60 countries.

Mr Newton-Jones ran the business on an interim basis from March before taking on the reins in July at a time when the group had just rejected a £266 million takeover approach from US firm Destination Maternity.