Babycare group Mothercare has announced a new business model after talks with franchisees as it also finalised a deal with Boots to sell goods across the chain in time for the autumn season.
The firm – which last year put its UK stores into administration with all 79 shops closing and 2,500 jobs lost – said the new franchise arrangements would ensure a “more sustainable and less capital-intensive business model”.
It will see the group’s franchise partners pay for products directly to manufacturers.
The group added it had finally completed the deal with Boots to become its UK and Ireland franchise partner – first announced in December – which will see it sell Mothercare-branded clothing from this autumn and goods including pushchairs and car seats in larger stores and online.
We believe this new way of working will ultimately have the added benefits of improving pricing for franchise partnersMothercare
The Boots deal had suffered a series of delays due to the coronavirus pandemic.
Shares jumped in morning trading, rising as much as 18% at one stage before settling around 4% higher.
On the new franchise plans, Mothercare said: “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.”
As well as the 10-year Boots deal, Mothercare said it had also struck a new 20-year franchise arrangement with Alshaya Group, its main franchise partner.
But Mothercare added that it still expects to take a £10 million hit from the UK stores administration last November.
The administration left Mothercare refocused on simply providing branded products to retailers.
In June, the group was also dealt a blow when temporary boss Glyn Hughes said he did not want the job on a permanent basis.
He quit in June, leaving Mothercare to be led by the chief operating officer and
chief financial officer, under the watchful eye of chairman Clive Whiley.