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Mothercare to open 150 stores overseas each year

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Mother and baby products retailer Mothercare has announced an increase in its international expansion plans at an investor and analyst event it has organised in New Dehli, India.

Mothercare has increased its planned overseas store openings in 2010/11 from 150 to 175 and hopes to unveil 150 outlets internationally each year, increasing retail space outside the UK by 15 to 20 per cent per annum.

India is one of the retailer’s most successful markets and its store portfolio in the country is set to reach 70 by March 2011, growing to at least 200 by 2015.

Jamie Talmage, Retail Analyst at BDO, commented: “Opening 100+ overseas stores per annum is quite ambitious, but Mothercare has a pretty well honed franchise model that only requires minimal investment.

“Picking the correct franchise partners has been a key element in its success. In India they have done this really well. Unlike some other UK retailers they have not allowed partners to overbuy or sub-franchise, and have put in place the excellent planning support.”

Total overseas network sales at the retailer are expected to double to around £1 billion by 2014 and international profit margin on network sales is targeted to increase by 20 to 30 basis points each year, up from ten to 20.

Nick Bubb, Retail Analyst at Arden Partners and one of the guests of Mothercare in India, said: “Opening more than three stores a week sounds a big ask, but the only real constraint is the shop-fitting equipment (as they have a standard look around the world) and in the fastest growing areas they have a stockpile of that stuff.

“Otherwise the demand from franchisees is huge and given the pace of shopping centre openings and the strength of their local partners there seems to be no problem in getting sites.”

India is one of the fastest growing economies in the world and British retailers have long been eyeing up expansion opportunities in the country.

Seventh largest in area and with the second biggest population in the world, the country is currently the 12th largest economy in terms of the market exchange rate.

Talmage added: “There is a risk that all Mothercare’s hard work goes out the window now and growth is just the main objective, but I don’t think this will happen. With its growing middle class and c20m birth per annum India clearly offers huge potential.”

Published on Friday 10 December by Editorial Assistant

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