Mothercare franchising deal with Boots delayed; employees furloughed
By Michele Maatouk
Date: Monday 30 Mar 2020
(Sharecast News) - Mothercare said on Monday that its franchising deal with Boots has been delayed due to the coronavirus outbreak, as it announced that 430 employees have been furloughed.
While it remains on track with the process of finalising the detailed contractual arrangements with Boots - expected to last for an initial five-year period - there have been some delays "as a result of the operational priorities forced upon both businesses by the virus outbreak".
Mothercare expects contractual arrangements to be finalised in late spring and that a wider product offering will be available online and in Boots stores from late summer 2020.
The company said that while UK government support for furloughed workers has been enacted for around 430 of its Boots Mini-Club retail colleagues, this will still result in incremental operating costs for the group.
It also warned that revenues would take a hit from the pandemic as its global franchise partners face the "considerable challenges" the virus and national government responses present.
"This is likely to lead to a material impact on Mothercare's short-term revenues. We will not be immune to the effect of widespread store closures and restrictions on local population freedom of movement in those territories," it said.
Chairman Clive Whiley said: "In the current circumstances, we have activated our contingency plans to deal with the challenges that we and others are facing in the current global crisis, focusing on the well-being of our colleagues alongside our ongoing business and corporate liquidity. We continue to enjoy the support of our key stakeholders and financing partners and we are very grateful to them at this unprecedented time.
"At this time we believe that our efforts should be focused on helping to preserve the businesses of our franchise and manufacturing partners through even more collaborative ways of working, to ensure both the short term liquidity of our business together with our return to longer term profitability. We are already seeing the benefits of this approach being brought to bear."
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