Mothercare to close 110 stores
Wednesday 18 May 2011
Mothercare today dealt a fresh blow to the UK high street as it unveiled plans to close 110 outlets and focus on out-of-town superstores.
Rents will be cut on a further 40 stores, the Watford-based group said, squeezing incomes for high street landlords even further. The new focus will be on out-of-town Parenting Centres, which contain its Early Learning Centre brand.
Most of the closures will be stores where the lease expires over the next two years. Mothercare has 120 of these, which will limit the cost to £5 million, it said.
Total store numbers in the UK will decline from 373 to 266, with 102 of these set to be out-of-town Parenting Centres.
The group, which warned about weak UK sales in March, said it expects big savings from the restructuring.
Its UK problems meant pre-tax profits fell from £32.5 million to £8.8 million in the year to March, despite another strong performance from its international business, where sales jumped by 16%.
Troubled music retailer HMV announced in January it would cut 60 stores from its UK network, while electrical retailers Comet and Dixons have also signalled their intention to cut outlets. Comet said last week it would close 10 stores while Dixons is said to want to cut its UK store numbers from 600 to 450.
Mothercare's announcement comes a day after retail guru Mary Portas launched a campaign to rejuvenate local shopping in Britain.
Town centre vacancy rates have doubled over the past two years, said Ms Portas, who will advise the Government on how to increase the number of small and independent retailers to tackle the problem of vacant shops.
Mothercare has already reduced its in-town estate by a quarter in the last three years as it benefits from a high level of lease expiries to close high street stores.
As well as reducing its exposure to the high street, Mothercare will invest in the remaining estate and has developed new store formats, one for Mothercare and one for the Early Learning Centre, which it will trial over the next few months.
"The formats provide an improved shopping environment, enhanced displays, signage and store layouts and better Early Learning Centre positioning in Mothercare stores," the company said.
Mothercare's revenues rose 4% to £794 million last year, with nearly three-quarters from overseas. UK sales fell 0.5% after a big year-end sale to clear out-of-date stock, though online revenues jumped by nearly 10%.
Chief executive Ben Gordon said he expects the UK retail environment to remain challenging, but plans to step up its international expansion, especially in Asia.
A further 150 overseas stores will open this year, generating 15% to 20% sales growth.
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