Mothercare has announced plans to slash its UK store portfolio by more than a third.
The retailer this morning outlined its “Transformation and Growth” strategy, which sets out plans to streamline its 311 stores in the UK to a core portfolio of 200 outlets.
The structural review, announced in November last year, aims to transform the business over the next three years. It will be presented in full by the group’s new chief executive Simon Calver in May.
The cornerstones of the review are to reduce its UK central costs, restore store profitability by focusing on a core portfolio of 200 outlets in the UK and accelerating its international expansion.
The UK core portfolio will comprise 95 out of town stores and 105 key high street stores. The closure of 111 stores over the next three years is expected to improve profits by around £13m, said Mothercare.
The retailer said that the store reduction programme would cost around £35m over the coming three years and that it had accordingly agreed to refinance its current banking facilities with HSBC and Barclays, increasing its facilities by £10m to £90m. The debt is due to mature in March 2015.
Mothercare chairman Alan Parker said the new strategy would “see us operate a lean, more competitive business, focused on the existing profitable stores in a smaller UK portfolio, combined with a state of the art online platform”.
Updating on trading for the year ended 31 March, the retailer said that UK sales had dropped by 6.3%, while total group sales showed a marginal increase of 0.7%.