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Mothercare unveils new strategy for transformation, growth
13 Apr '12
5 min read
ii) Reduction of UK store portfolio
We are announcing today a further reduction in the UK store portfolio, reshaping the UK around a profitable core of 200 stores. This will comprise 95 out of town stores and 105 key high street stores (173 Mothercare and 27 Early Learning Centres).
In FY12 we closed a net 62 stores in the UK (3 Mothercare and 59 Early Learning Centres), taking the total UK store base to 311 today. We will now close 111 stores (36 Mothercare and 75 Early Learning Centres) over the next three years to March 2015, taking the total store estate to 200. On an annualised basis the store reduction programme is expected to improve UK profits by c. £13m, by March 2015.
Whilst the cost reduction programme and reduction of the store portfolio deliver considerable annualised benefits over the three years, we do not expect a material impact on operating profit in FY13.
Cash investment is required to fund the UK store portfolio reduction and cost saving programme. Over the next three years this is estimated to be £35m in total.
Accordingly, we have agreed the refinancing of our banking facilities with the support of our two existing banks, HSBC and Barclays, increasing the level of committed facilities from £80m to £90m and extending the term to 31 May 2015 (note 3). These facilities further strengthen the group's financial position and provide additional liquidity and covenant headroom to accommodate the new three year strategy.
In addition, given the cash investment required in the business, the Board has concluded that the Company will not pay a dividend until the Transformation and Growth strategy is delivering benefits.
"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."
We are announcing today a further reduction in the UK store portfolio, reshaping the UK around a profitable core of 200 stores. This will comprise 95 out of town stores and 105 key high street stores (173 Mothercare and 27 Early Learning Centres).
In FY12 we closed a net 62 stores in the UK (3 Mothercare and 59 Early Learning Centres), taking the total UK store base to 311 today. We will now close 111 stores (36 Mothercare and 75 Early Learning Centres) over the next three years to March 2015, taking the total store estate to 200. On an annualised basis the store reduction programme is expected to improve UK profits by c. £13m, by March 2015.
Whilst the cost reduction programme and reduction of the store portfolio deliver considerable annualised benefits over the three years, we do not expect a material impact on operating profit in FY13.
Cash investment is required to fund the UK store portfolio reduction and cost saving programme. Over the next three years this is estimated to be £35m in total.
Accordingly, we have agreed the refinancing of our banking facilities with the support of our two existing banks, HSBC and Barclays, increasing the level of committed facilities from £80m to £90m and extending the term to 31 May 2015 (note 3). These facilities further strengthen the group's financial position and provide additional liquidity and covenant headroom to accommodate the new three year strategy.
In addition, given the cash investment required in the business, the Board has concluded that the Company will not pay a dividend until the Transformation and Growth strategy is delivering benefits.
"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."
Mothercare plc
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