Fashion
Embattled UK baby goods retailer Mothercare is to close 50 stores and seek rent reductions on a further 21 as part of a plan to stay viable.
The company has produced a Company Voluntary Arrangement (CVA) which also proposes axing hundreds of jobs.
After posting a £72.8 million loss in its last financial year, and having already closed more than half of its stores in the last five years, the company has admitted it is in a “perilous” position.
GlobalData said while the CVA gives hope for the chain’s survival, its problems run deeper than store leases.
‘‘Even if this CVA is approved the company’s future is not assured given greater issues in its business than an overambitious store estate: namely its inability to entice younger parents to its stores, something that value retailer, Primark, has been extremely successful at.
‘‘Mothercare is a household name in the babycare and baby equipment market, however over the past few years it has struggled to keep pace, losing market share to the grocers and the rising dominance of online players, with Amazon primarily, threatening its position,” said Mills.
‘‘While Mothercare was slow to move online, its website now drives almost half of its sales, though, as it has acknowledged, it requires further investment, and this rather than stores, is where it plans to spend the bulk of the cash it hopes to raise.”
Mills said the stores which will remain trading if the CVA is accepted by creditors and landlords, need “a lot of attention”.
“Effort is needed to make them more engaging, creating a sense of community through classes and events among its shoppers to ensure loyalty and repeat purchases.”
If the CVA is approved – which is likely – mothercare would have just 73 stores trading by 2023.
