Mothercare puts 'For Sale' sign on 121 UK stores

Childrenswear chain circulates confidential list of available shops to other retailers
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The Independent Online

Mothercare has sent out a list of 121 UK outlets that could be up for grabs as it ploughs on with its strategy of closing shops. The childrenswear retailer has already announced that it is to bring down the shutters on 30 shops this year but the new list could lead to many more being sold.

Working with property agent CB Richard Ellis, it began circulating the confidential list among other retailers last week. It contains the details of 32 loss-making shops that are a priority to close, and a longer list of shops to sell if the right price is offered. The list also includes Early Learning stores – the chain Mothercare bought in 2007.

Mothercare, which has 377 British shops, announced in November 2009 that it would close 30 a year over three years as it moves from its smaller, high-street shops to out-of-town locations. The idea is that customers can drive to the these larger shops, known as "parenting centres", and park easily. Fourteen have opened so far this financial year.

Mothercare, with a market capitalisation of £369m, is due to give an update on its property strategy at its full-year results on 18 May. It has issued two profit warnings this year. In March it said UK sales remained in the red and revealed that profit margins were taking a bigger-than-expected hit.

Nick Bubb, an analyst at Arden Partners, said: "The issue is that the collapse in UK profits is completely undermining the growth overseas. The UK-overseas imbalance issue is a mess and management are under pressure to sort it out."

Mothercare would not comment on the 121-store list, but its chief executive, Ben Gordon, said last month in a trading update: "The UK is an unsure and slightly nervous environment, but international is booming."

Trading overseas in India, China and the Middle East has proved successful, and there are 894 stores outside Britain – with 263 in the Middle East and 242 in the Asia-Pacific region. Shares have fallen sharply since January from 600p, closing on Friday at 417p a share.

Mike Logue, a former Asda director, is on the verge of joining as UK director for Mothercare and Early Learning Centre, leaving Mr Gordon free to concentrate on overseas.

The British retail landscape is still tough for established chains, and changing consumer habits have caused many to rethink their property strategies.

Electrical retailer Dixons has reduced its store portfolio by opening two-in-one store concepts and Currys megastores.

Furniture retailer DFS, advised by property agent Harvey Spack Field, is in talks to buy six stores from Dixons to fuel its expansion. DFS is gradually growing following its purchase by Advent International in April.

Britain is becoming more difficult for retailers affected by online and supermarket sales, such as music, games and electricals. But the distress of some retailers leads to opportunities for other – successful and acquisitive – retailers.

The administration of DIY retailer Focus on Wednesday will be an opportunity for its rivals to snap up stores from the administrator. B&Q parent Kingfisher has taken 31 shops, and The Range, Wickes and Dunelm will also look at batches of stores. The 181-store portfolio has around 20 shops with food planning consent, which will mean some supermarket chains will also take a look.