Further re Transformation Plan Update
Mothercare plc: Transformation Plan Update
Mothercare plc ("Mothercare", "the Company" or "the Group") today provides the following update
In recent months we have been in close discussion with both our international franchise and manufacturing partners to modernise and improve our commercial relationships to mutual benefit, with the objective of improving pricing and quality for our franchise partners and reducing financial and operational risk for our manufacturing partners. We are pleased to report that following these constructive discussions we have successfully launched a more sustainable and less capital-intensive business model going forward, with effect from the Autumn/Winter 2020 season. This new model results in our franchise partners contracting to pay for products directly to our manufacturing partners, thus removing the timing mismatch we were experiencing with the reduction in our payment terms and so improving the Group’s working capital requirements. We believe this new way of working will ultimately have the added benefits of improving pricing for franchise partners, which in turn should better incentivise retail sales growth and assist our manufacturing partners in reinstating credit insurance for future seasons.
On 19 August we completed the detailed contractual arrangements for the appointment of Boots UK Limited ("Boots") as our UK and Republic of Ireland franchise partner. This will be for an initial period of ten years and the terms and royalty rates arrangements are commensurate with those of the Company’s other franchise agreements.
Mothercare branded clothing will be available in a large number of Boots stores across the UK and Ireland from this autumn with home and travel products (including pushchairs and car seats) available in larger Boots stores, as well as online at www.boots.com.
Boots is at the heart of one of the largest healthcare businesses in the world and Mothercare will dovetail well as the specialist brand for parents and young children in both Boots stores and online.
We are also delighted to have entered into a new twenty-year franchise agreement with the Alshaya Group, our most significant franchise partner. We highly value this long-standing and continuing strong commercial relationship, and we look forward to contributing to an extended period of mutually beneficial partnership growth in the future.