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Mothercare calls in KPMG

Mothercare has drafted in restructuring experts KPMG to assess options for its struggling UK business.

The retailer has hired KPMG to develop contingency plans for its UK arm should its plan to shift retail operations to an independent franchise model not come to fruition.

Mothercare’s current primary objective is to sell the UK business. However, it has appointed KPMG to assess back-up options, Drapers understands.

It previously appointed KPMG to oversee a company voluntary arrangement process in May 2018, under which 50 stores closed. It also sought rent reductions on a further two stores and said it would seek to save a further £5m in costs as part of restructuring plans.

In July, Mothercare CEO Mark Newton-Jones said the business was seeking to shift the UK retail operations to an independent franchise model as part of ongoing plans to revamp its structure, but did not provide any detail on a proposed time line for the change.

In its most recent results, total UK sales fell by 23.2% for the 15 weeks to 13 July 2019 as a result of the store closure programme, which cut the UK portfolio from 134 to 79. Online sales were also impacted by store closures – down 12.1% – as the retailer lost out on sales that were previously made via in-store devices. Total group sales fell by 9.2%.

KPMG declined to comment.

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