Mothercare, the renowned brand for parents and young children, has faced significant challenges in recent years. However, the company’s decision to adopt a brand owning/franchised business model and switch its stock exchange listing to AIM (Alternative Investment Market) is starting to yield positive results, as indicated in its latest trading update.

Despite the adverse effects of the pandemic on sales, Mothercare has witnessed improvements in its profits. Unaudited net worldwide sales for the financial year ending in March amounted to £326 million, which reflects a 40% decrease due to the varying approaches to tackling Covid-19 in franchisee markets. However, the company successfully reduced its net debt to £12.1 million by the end of the year, and it anticipates reporting a small EBITDA profit for the financial year, surpassing its previous expectation of a small loss.

One of the key factors contributing to Mothercare’s success is its adoption of an “asset-light” operating model. This approach involves allowing the majority of stock purchases to be invoiced directly to its franchise partners by manufacturers, and shipping the products directly from those manufacturers. Mothercare retains ownership of the brand and assumes responsibility for design, quality control, and selecting manufacturing partners. This strategy has consistently delivered financial benefits and has garnered positive feedback for its new, customized product strategy in international markets.

Additionally, Mothercare is actively engaged in the development of a new Enterprise Resource Planning (ERP) system. This system aims to enhance information accessibility for both the company and its manufacturing and franchise partners, resulting in greater ease, accuracy, and cost-effectiveness. Furthermore, Mothercare has endeavored to localize its products on an international level. By conducting an extensive customer survey across major territories, the company gained valuable insights into customers’ perceptions of the local Mothercare business as well as its competitors. This information has shaped a revised product strategy that aligns more effectively with the expectations of international markets, moving away from products originally designed for the UK market.

The recently presented SS22 season, which incorporates these newfound insights, has received positive initial feedback from Mothercare’s franchise partners. These developments serve as a strong indication of a promising future for Mothercare as it continues to adapt and thrive in the ever-evolving retail landscape.

Useful links:
1. Mothercare Official Website
2. Latest News from Mothercare