Maternity specialist retailer Mothercare is continuing with its turnaround strategy in a rapidly changing market.
Mothercare chief executive Simon Calver said in May it would take three years to turn around the ailing maternity specialist, and he is targeting a vastly reshaped business at the end of the process.
The surprise appointment of Calver, the former chief executive of Amazon-owned DVD rental business Lovefilm, in April, combined with the opening of rival Kiddicare’s first standalone store in Nottingham last month, have exemplified the challenges the retailer, founded in 1960, faces in the 21st century.
Calver’s appointment was a clear sign that Mothercare wants to make the most of online in a market where pregnant women or parents with young children may not want the inconvenience of journeying to high street stores and carrying home often bulky products.
Meanwhile, Morrisons-owned Kiddicare’s venture into physical stores – it will have 10 in former Best Buy premises by September 2013 – is a sign of the etailer’s intention to develop a strong multichannel strategy to take greater market share. Mothercare will aim to ensure its multichannel strategy utilises its physical assets while harnessing online.
The migration of customers online, coupled with poor consumer spending, has hit trading at Mothercare’s 295 UK stores. Calver has said that ultimately Mothercare will be a 200-store business in the UK, and chairman Alan Parker said in February the retailer may consider franchising UK stores.
Trade has not always been hard to come by for Mothercare, however. For several decades after its creation it remained the unrivalled specialist on the high street – it enjoyed strong sales and floated in 1972. The retailer merged with Sir Terence Conran’s Habitat in 1982 and joined retail conglomerate Storehouse, alongside fashion retailers Bhs and Richard Shops as well as homewares retailer Heal’s.
Storehouse was dismantled in 2000 when BHS was sold to Sir Philip Green’s Measurement firm and the group was renamed Mothercare Plc – the maternity retailer was the only brand remaining.
Despite the 6.2% fall in like-for-like sales and the plunge into the red in the year to March 31, the retailer remains on a relatively sound footing financially. The group refinanced in May 2011, doubling its committed bank facilities from £40m to £80m, extended to May 2014 on improved items. This will aid Calver’s strategy as he aims to revive the brand domestically after a difficult few years.
Calver did not inherit an entirely poisoned chalice from former chief executive Ben Gordon, who stepped down in November 2011. Gordon had steered Mothercare into a new era of international and wholesale growth for the core chain and sister retailer Early Learning Centre, acquired in 2007.
Gordon’s tenure, which began in 2002, was defined by Mothercare’s overseas growth as he took it global. The retailer now trades in 58 countries from more than 1,000 stores including in Europe, the Middle East and the Far East.
He also expanded the UK business, through the acquisition of the Early Learning Centre. However, the retailer has begun shuttering standalone elc stores, with plans to close 75 by March 2015, and is instead incorporating the brand into Mothercare stores.
On Gordon’s departure, Parker kicked off a transformation and growth plan which Calver is now leading. Calver will hope the overseas arm continues to perform strongly, as he focuses on the UK.
But the new boss has been hit by some early blows since joining. Finance director Neil Harrington quit to join Cath Kidston in April and UK head of retail Jeff Fagan made a surprise exit less than a year after joining the business in June.
However, the appointment of former Sainsbury’s director of retail operations Nick Henwood, as well as new sourcing director Philippe Dayraud and marketing boss Jude Bridge, will strengthen the top team.
Mothercare remains a retailer in transition as it looks to find a multichannel balance. The hope is that, alongside strong international growth, improvements in the UK such as features showcased at its new 30,000 sq ft Edmonton store, including ultra-sound facilities, will mean a new phase of growth for one of the biggest maternity brands.
Mothercare in numbers
- Chairman Alan Parker
- Chief executive Simon Calver
- 2011/12 group sales £812.7m – UK sales £560m/international £252.7m
- 2011/12 pre-tax loss £102.9m
- UK stores 295 stores
- Group stores 1,348 stores