Mothercare calls in KPMG

The accountancy giant brought back in to assess the viability of a franchise model in the UK to mirror its international business, the possibility of a second CVA or further store closures

Written by Rhys Thomas

Posted 28.10.2019 | Retail

Mothercare calls in KPMG thumbnail

KPMG has been called in by Mothercare bosses to assess the long-term future of the business, which has seen a perpetual downturn in the UK contrasted against steady business overseas.

The accountancy firm will look at contingency plans should chief executive Mark Newton-Jones’ desire to franchise out its UK stores, a model which has worked well for the nursery retailer’s international business, not reach fruition.

Earlier this year, as the retailer reported total group sales decline of 9.2 per cent in the 15 weeks to 13 July 2019, Newton-Jones said the retailer was “evolving and optimising the ownership, structure and model for our UK retail operations as an independent franchise”.

The move would transform the business into a branding and product supplier, off-loading overheads like staff payroll and business rates to franchise partners.

The Times reports that while this sale of the UK business would be the preferred outcome, KPMG could also look to pursue a second CVA, shutting further Mothercare stores or, at the very least, asking landlords to cut rents.

More than 50 Mothercare stores were closed last year – largely in places across the UK that were over served by more than one outpost – and cut around 800 jobs. The retailer lost £36.3m before tax for the full year, and saw like-for-like sales diminish nearly nine per cent.

Mothercare sold off its toy retailer business Early Learning Centre to The Entertainer in March this year. Gary Grant’s toy retail empire purchased the high street staple for £13.5m.

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