Mothercare, the retailer specializing in parent, baby, and child products, has announced a considerable improvement in its profitability for the 52-week period ending on March 26. This positive outcome is attributed to the company’s strategic shift towards an asset-light global franchising business model. Compared to the previous year’s loss of £21.5 million ($29.5 million), Mothercare has now achieved a profit of £12.1 million ($16.7 million). Additionally, the company’s EBITDA has increased from £2.2 million ($3 million) to £12 million ($16.5 million) compared to the previous year.

Internationally, Mothercare experienced a 7.5% increase in retail sales, largely driven by its franchise partners in Europe and Asia. The total international retail sales reached £385.3 million ($529.9 million), up from £358.6 million ($492.3 million) in the previous fiscal year (FY2021). However, these figures were significantly influenced by the challenges posed by the ongoing Covid-19 pandemic, with retail sales in these areas declining by roughly 25% compared to pre-pandemic levels. Nevertheless, online sales continue to be a strong revenue stream for the company, comprising 11% of total sales, albeit slightly lower than last year’s 12%. This reflects the easing of Covid-19 restrictions and an increase in in-store shopping, although online sales still outperform pre-pandemic levels.

In the first 21 weeks of the current fiscal year (FY23), sales generated by Mothercare’s franchise partners amounted to £135 million ($186 million) excluding Russia, and £150 million ($206 million) including Russia. It is important to note that Mothercare closed its stores in the UK in 2019 but has since continued to sell its products through a franchise agreement with Boots, a well-known pharmacy and beauty retail chain, established in 2020.

Mothercare’s overall revenues were also impacted by its decision to exit the Russian market in March due to the invasion of Ukraine. Nevertheless, the company remains committed to pursuing international growth in the years ahead, while also considering the challenges presented by the global economic environment and inflationary pressures.

In conclusion, Mothercare’s shift towards an asset-light global franchising business model has proven to be a successful strategy, resulting in a significant improvement in profitability. With a strong focus on international expansion and a resilient online presence, the company aims to navigate the complexities of the current economic landscape and continue its upward trajectory in the future.

Useful links:
1. Mothercare Official Website
2. Boots Official Website