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Coronavirus: Mothercare delays start of Boots deal

Mothercare has announced there has ”inevitably been some delays” with its UK franchise deal with Boots due to coronavirus.  

Its UK franchise arrangement with Boots has seen some delays due to Covid-19 but its due to be finalised in late spring, with a wider Mothercare product offer available online and in Boots stores from late summer 2020. 

Mothercare said the impact of coronavirus on its franchise partners will “have a material impact on [its] short-term revenues”, however, it said it’s drawing on the experience of entering administration last November. 

On 5 November, Mothercare appointed Zelf Hussain, Toby Banfield, and David Baxendale of PWC as administrators for Mothercare UK and Mothercare Business Services (MBS), which is responsible for Mothercare UK’s back-office functions, including finance, HR, property and IT.

Mothercare said it would strengthen its global brand, and improve the product design, marketing and distribution of Mothercare products around the world to its franchisees. 

In December, Mothercare signed an exclusive franchise deal with pharmacy and beauty retailer Boots UK, which will stock Mothercare-branded clothing, and home and travel products, including pushchairs and car seats.

The retailer also announced it remained in discussions with a number of debt providers regarding entering into new debt facilities.

This includes conversations with US advisory, lending and investment firm Gordon Brothers to progress a £20m secured term loan. 

It has announced a “substantial reduction in bank debt” since November 2019. This includes an initial distribution of £10m from its administrators. 

Its total secured debt, which at the time of the administration included the group’s £24m revolving credit facility, has been reduced to £18.5m.

Another distribution is expected from the administrators to reduce this further. 

Clive Whiley, chairman of Mothercare, 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.”

”We believe that the intrinsic value of our brand, the close contact fostered with our key stakeholders over the last two years and our seamless, deep understanding of the group’s new trading cash flow dynamics, honed over the last six months, will prove to be extremely valuable.

“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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