As part of what Mothercare plc (MTC.L) describe as a “Transformation and Growth Strategy”, the company will shut down a further 36 nursery stores and 75 Early Learning Centre (ELC) shops over the next three years.
These newly announced store closures are in addition to the 3 Mothercare stores and 59 ELC shops closed down in the past year. This will reduce the current number of UK branches from 311 to 200 by March 2015; leaving a total of 173 Mothercare and 27 ELC stores. The company believes that the further store closures will add around £13 million to its bottom-line by March 2015.
Jobs are also under threat at the company’s UK head office in Watford, where 98 staff are all ready in consultation – and together with as many as 750 of store employees - are at risk of redundancy.
Sales in the firm’s UK stores dropped by 6.3% in the past year, however, sales in foreign countries grew by 16%, leaving the group’s total sales up by 0.7% by the end of the forth quarter. The company plans to accelerate its international expansion “… with more store openings in both new and existing countries.”
Alan Parker, Executive Chairman, stated: “Since November, a significant amount of progress has been made across the business. We launched a structural and operational review, appointed a new CEO, closed a significant number of underperforming stores and commenced a consultation programme to streamline our head office function. We have also introduced immediate initiatives aimed at improving value and service for our customers.
“Today we have announced the framework of our decisive three year strategy to restore the UK business back to profit and strengthen our foundations for growth. This will see us operate a lean, more competitive business, focused on the existing profitable stores in a smaller UK portfolio, combined with a state of the art online platform. Our International business continues to perform strongly and we plan to further accelerate growth.
“We now have the cornerstones of our Transformation and Growth strategy in place. Simon Calver joins us later this month and brings with him invaluable business change skills plus e-commerce and international brand expertise. Simon will take whatever action is necessary to deliver the strategy and, as such, will present his detailed plans in May.
“Mothercare is a great global brand with strong international partners. Today marks the beginning of a three-year turnaround and I am confident we will deliver a sustained recovery and long term success.”
Trading update (12 April 2012)
Full year 2011-2012 (52 weeks)
Worldwide network sales up 4.3%
Total group sales up 0.7%
International retail sales up 16.0%
Total UK sales down 6.3%
UK like-for-like sales down 6.2%
Direct in Home sales down 3.4%
Full year statutory trading data based on 53 weeks (vs. 52 last year)
Worldwide network sales up 6.4%
Total group sales up 2.4%
International retail sales up 18.5%
Total UK sales down 4.6%
Direct in Home sales down 1.7%
Fourth quarter (12 weeks)
Worldwide network sales up 4.5%
Total group sales down 4.2%
International retail sales up 18.0%
Total UK sales down 9.5%
UK like-for-like sales down 8.2%
Direct in Home sales down 3.2%