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Mothercare to introduce branded fashion in turnaround plan

Mothercare will launch third-party fashion brands into all UK stores from October as part of a three-year turnaround plan.

The retailer, which today announced plans to launch a rights issue to raise £100m to deliver on its new strategy, will add maternity and kidswear brands to its own-brand offer from the start of October.  

Chief executive Mark Newton-Jones told Drapers the brands would complement the current offer and would sit at the top tier of its pricing architecture, which at present tops out at £35 for a maternity dress and £30 for kids’ coat.

“We will build the brand roster step by step and they will sit at the top end of the pricing pyramid,” he explained. “We have more value or basic fashion products at the moment and the brands will help rebalance this. Fashion prices were too skewed to the lower end, they had dropped by 20% over the last few seasons.”

The business trialled Bestseller Group-owned maternitywear brand Mamalicious last month, which Newton-Jones described as a “resounding success”. “The label had a higher price point (£40 for a dress) and it sold really well, so that gives us the confidence to sell brands and to stop discounting.”

He would not name any other brands that could be stocked.

Mothercare said the rights issue, which will raise £95m net of expenses, is aimed at transforming it into a digitally led business with a modern shop estate.

Some £25m of the proceeds will be applied to the store closure and relocation plan while £20m will go on refurbishments. A further £10m will be invested in digital systems and infrastructure and £40m will be used to pay off the existing loan.

Mothercare plans to close 60 UK stores, cutting its total to 160 by 2017. It will maintain its 1.6 million sq ft retail footprint by relocating some of its remaining stores to larger units, including out-of-town retail parks. It aims to have 110 out-of-town stores and 50 stores in town centres by 2017. The out-of-town locations will stock more of Mothercare’s non-fashion offer, including prams.

Newton-Jones said: “Two thirds of our stores are in town centres at the moment; we want to reverse that as it allows us to provide a broader product mix and have more focus on the customer.”

In-store iPads, digital walls, personalised emails and an integrated online/bricks-and-mortar stock system will be introduced as part of the overhaul.

The rights issue will be priced at 125p per new ordinary share, a 49.6% discount on the closing price of 248.25p per ordinary share on September 22.

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