Mothercare performance improves, Boots franchise deal begins
As Boots kicks off its franchise deal with Mothercare via a website launch Friday ahead of product being in stores on Monday, Mothercare has also reported its latest set of results. And the story of FY20 (the period to March 28) shows a company going through big change.
The company, which has transformed itself from a retailer into a brand owner and franchisor, said it has emerged from the tribulations of recent years “as a sustainable, capital-light, international franchise brand”.
It had upbeat financial news and a prediction of a “stable future” as it achieved net profits of £14.4 million after a £97 million loss a year earlier. However, turnover was £164.7 million, down from £199.8 million in the prior year and the pre-tax loss was £6.4 million, although that was narrower than the £18 million loss of a year before.
But given how different the company is now from what it was at the start of that financial year, those results seemed almost irrelevant.
What’s more important is what’s happening today with the company saying that in the first 28 weeks of FY21, its franchise partners, all of whom were severely affected by Covid-19 lockdowns, recorded total retail sales of £145.8 million, a 39% decline year-on-year on a continuing operations basis.
Overall, the impact of store closures during the peak of lockdown measures “was only partially offset by countries which were able to continue to trade via online platforms”.
It currently estimates that 95% of its partners' global retail locations are now open, from a low point of 27% in April.
So what does this mean for its global operations? It said there’s been “a strong recovery in the Middle East following the reopening of stores after lockdown, with the exception of UAE which has been affected by the reduction in tourism”.
The recovery in Russia “has been slow due to government restrictions delaying the full reopening of the store estate. While all stores are now open, the market has not fully recovered with current performance driven down by lower footfall”.
Trading “continues to be challenging in the key markets of India and Indonesia due to the continuing impact of Covid-19 on footfall and consumer confidence”.
And of course, the Boots deal starting in the UK will also be key for the future.
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. We are excited to launch our new UK and Ireland franchise with Boots, restoring the Mothercare brand to its home territory”.
The company has also entered into a new 20-year franchise agreement with Alshaya, its largest partner, which gives it stability and visibility for the future.
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