Mother­care in Mena will be un­af­fected by re­struc­tur­ing of the UK busi­ness

The National - News - - BUSINESS - SARAH TOWNSEND

Fran­chised Mother­care stores across the Mid­dle East and North Africa will not be af­fected by the roots-and-branch re­struc­tur­ing of the UK par­ent com­pany, op­er­a­tor Al­shaya Group an­nounced yes­ter­day.

“The an­nounce­ment from Mother­care in the UK has no im­pact on stores in the Mid­dle East,” said a spokesper­son for Kuwait-based Al­shaya Group, which op­er­ates the Mother­care fran­chise in the re­gion.

The baby prod­ucts re­tailer in the UK said it will close 50 stores as part of a res­cue plan fol­low­ing years of losses – a move that puts 800 jobs at risk. Its earn­ings plum­meted to a pre-tax loss of £72.8 mil­lion (Dh361m) in 2017, from £7.1m profit the pre­vi­ous year. The UK busi­ness has not turned a profit since 2012.

Mother­care also an­nounced the re-ap­point­ment of Mark Newton-Jones as chief ex­ec­u­tive af­ter he left in April fol­low­ing poor Christ­mas trad­ing and a profit warn­ing. Un­der the planned re­struc­tur­ing – through a UK-ad­min­is­tered “com­pany vol­un­tary ar­range­ment” (CVA), which pre­vents the firm from go­ing into ad­min­is­tra­tion – ail­ing Mother­care will cut rents at 21 stores, in ad­di­tion to the planned clo­sures.

It has also ar­ranged a re­fi­nanc­ing pack­age worth up to £113.5m, in­clud­ing £28m raised through is­su­ing new eq­uity shares, and ex­tend­ing ex­ist­ing debt fa­cil­i­ties. There will be a fur­ther £8m in new share­holder loans, Reuters re­ported. The CVA is sub­ject to a ma­jor­ity vote from Mother­care’s cred­i­tors.

“Re­cent fi­nan­cial per­for­mance, im­pacted in par­tic­u­lar by a large num­ber of legacy loss-mak­ing stores within the UK es­tate, has re­sulted in a per­ilous fi­nan­cial con­di­tion for the group,” Mother­care said in a state­ment yes­ter­day.

The re­tailer has nearly halved its UK store num­bers over the past five years and although it had in­tended to have 92 stores by 2023, the lat­est clo­sures will shrink that fig­ure to 73.

Mother­care was Al­shaya Group’s first re­tail fran­chise, launch­ing in 1983. To­day, the con­glom­er­ate op­er­ates more than 220 Mother­care stores across the Mena re­gion. That num­ber has re­mained con­stant over the past year de­spite on­go­ing re­views of in­di­vid­ual store per­for­mance as stan­dard prac­tice.

Al­shaya will con­tinue its re­la­tion­ship with the par­ent com­pany de­spite the UK re­struc­tur­ing, in­clud­ing con­tin­u­ing to pro­cure stock from Mother­care, ne­go­ti­ate sup­plier costs and op­er­ate the brand’s e-com­merce web­sites.

In 2016, an­other Al­shaya-fran­chised UK brand, BHS, en­tered into a CVA agree­ment with cred­i­tors, un­der which 40 of its 160 UK stores were shut. Al­shaya said the re­struc­tur­ing would have no im­pact on BHS stores in the Mid­dle East.


Mother­care, which was launched in the Mid­dle East in 1983, was Al­shaya Group’s first re­tail fran­chise

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