Analysts now expect baby & parent products retailer Mothercare to cut even more stores from its UK property portfolio than previously announced, the Financial Times (FT) reports.
Mothercare had previously confirmed that it intended to reduce its number of UK stores from 352 to 266 but industry watchers are now predicting that its strategic review will reveal that it has decided to cut back even further to around 200 outlets.
The store reduction plan was initially set to be completed by March 2013 but the target and completion date was set before Chairman Alan Parker initiated a full business review and before Simon Calver was named as the group’s new CEO.
According to the FT, a note from Mothercare’s joint broker JP Morgan Cazenove yesterday revealed that the conclusion of the review, which was due on April 12th, will now be delayed until May when the retailer announces its full-year results.
Peter Smedley, analyst at Charles Stanley Securities, told the FT: “The 266 store target was set before the start of the review. With the ongoing pressures on Mothercare’s core market, it would be logical for this to be accelerated, with about 200 stores a reasonable number.”
While Mothercare has successfully grown its operations overseas its core UK market has suffered from increased competition and a downturn in consumer spending.
Its half-year losses totalled £81 million and despite an improvement during Q3 its like-for-like sales for the first 9 months of the year were down 5.4 per cent compared to the same period last year.
Mothercare’s retreat from UK stores, with most of the planned closures targeting out-of-town locations, will coincided with rival Kiddicare’s entrance into brick and mortar trading after initially beginning as an online trader.
Kiddicare was purchased by leading supermarket chain Morrisons in February 2011 for £70 million, and the grocer recently established its ambitions for the brand by buying ten large out-of-town outlets from electricals specialist Best Buy for it to use.