// Mothercare confirms new business model in the UK
// This includes finally completing the 10-year deal with Boots to become its UK & Ireland franchise partner
// It had also struck a new 20-year franchise arrangement with Alshaya Group, its main franchise partner
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 maternity and early childhood retailer said the new franchise arrangements in the UK market would ensure a “more sustainable and less capital-intensive business model”.
It comes after Mothercare, which continues to trade online and through overseas stores, last year put its UK stores into administration with all 79 shops closing and 2500 jobs lost.
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The new deals will see the group’s franchise partners pay for products directly to manufacturers.
Mothercare 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.
The Boots deal had suffered a series of delays due to the coronavirus pandemic.
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.
However, Mothercare added it still expected 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 chief executive 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.
Hughes had assumed the role of interim chief executive after Mark Newtown-Jones relinquished his responsibilities and stepped aside to an executive director role.
Last month, Newtown-Jones stepped down from the position, but will continue to serve as a non-executive director subject to his re-election at Mothercare’s next AGM.
with PA Wires