Mothercare closes 110 UK stores in favour of Eastern trade…

May 19, 2011

The baby goods retailer has put the blame on greedy high-street landlords and cash-strapped British consumers for their decision to close down more than a quarter of its UK stores.

250 employees will lose their jobs as a result and Mothercare have announced that a further 40 stores will undergo rent renegotiations.

Like other retailers have recently done, Mothercare will also look to expand on its eastern hemisphere trade where sales rose by 16.3pc last year to £571m.

Ben Gordon, chief executive, explained that the “acceleration” of Mothercare’s strategy is down to the fact that 120 shop leases are expiring over the next two years.

Mothercare announced that 80pc of closures will be from the estate of the Early Learning Centre, the toy retailer Mothercare bought for £85m back in 2007.

The figures for Mothercare speak for themselves; UK like-for-like sales fell 4pc and underlying profits fell from £37.2m to £28.5m pre-tax, before exceptionals and including non-cash currency adjustments.

Mr Gordon hit out at high-street landlords, who he feels are overpricing rent given the growth of out-of-town and internet shopping, he said: “There is an unrealistic expectation from high-street landlords.”

Despite the fact that Mothercare will cut UK stores from 373 to 266 by March 2013, selling space will only take a 12pc cut. Where finances are concerned, Mothercare look to make annual savings of £18m – and a further £5m costs from closing shops without expiring leases.

And, like other retailers, the focus is on expanding internationally, with particular interest in Australia, China and India. Mr Gordon expects 150 stores to be opening this year, in conjunction with the 894 stores already open – spanning 54 countries.

It seems a growing interest of retailers to break into the Asian market, Mr Gordon explained that; “In India 24m babies are born each year and 19m in China against 700,000 in the UK,” concluding; “If you get a small percentage of that, it’s quite a big business.”

In other news…

It’s music to “Earth’s” ears as the first ever biodegradable cling film has gone on sale.

Baco, the British company that makes wraps and foils, has manufactured Baco BioWrap, which it claims is completely biodegradable and can be broken down within two years, unlike normal cling film which can take decades, if put on the compost heap or sent to landfill.

The new product is understandably more expensive at £1.75 for 40 metres, compared with the average £1 that you’ll pay for a normal roll – but it’s a step in the right direction and the environmentally friendly won’t quibble over the extra 75p.