Mothercare plc

Transformation Plan Update

                                        Mothercare plc: Transformation Plan Update

Mothercare plc ("Mothercare", "the Company" or "the Group") today provides the following update on its Transformation Plan announced on 5 November 2019 and further to the update released on 23 January 2020.

In those announcements, we set out our plans for the Group to become a profitable international franchise operation, generating revenues through an asset-light model, operating in over 40 international territories. We continue to make significant progress with those plans and have substantially completed our transition to refocus the Group on our core competencies of brand management and the design, development and sourcing of product to grow the Mothercare business with our global franchise partners.

Covid-19

As with all businesses, the impact of Covid-19 and the associated actions from governments and corporations around the globe has been having direct consequences for the Group, in particular given the disruption to both our franchise partners’ and suppliers’ businesses and operations.

In the UK, whilst many of our key UK head office staff are working productively from home, a number of our retail personnel are unable to do so. Accordingly, whilst UK Government support for furloughed workers has been enacted for around 430 of our Boots Mini-Club retail colleagues, this will still result in incremental operating costs for the Group. We welcome the measures announced by Her Majesty’s Government, including tax reliefs and other forms of financial aid, which we will seek to utilise as and when they become readily accessible.

Franchise Partners

As retailers, our global franchise partners are facing the considerable challenges that the Covid-19 pandemic and national government responses present to their businesses in their respective territories. This is likely to lead to a material impact on Mothercare’s short-term revenues. We will not be immune to the effect of widespread store closures and restrictions on local population freedom of movement in those territories.

However, the experience we gained as a result of the controlled supply shock that was exerted upon the business at the time of the administration of Mothercare UK and related store closures last November, is proving invaluable. We are in close dialogue with our franchise partners and our manufacturing partners, as we seek to manage and mitigate the overall impact on both our and their businesses.