Mothercare has announced that the start of a franchising deal with Boots has been delayed by the coronavirus pandemic.
As reported by City A.M.,Mothercare said its global franchise partners “are facing considerable challenges” related to the outbreak in an update to the stock exchange this morning, adding that it will “not be immune to the effect of widespread store closures”.
Following its collapse as a retailer last year, Mothercare announced plans to transform itself into an international franchise operation. In December, it said it had struck a deal with Boots for the retailer to become its exclusive franchisee in the UK.
Mothercare said this morning that while it remains on track with finalising contractual agreements with Boots, “there have inevitably been some delays as a result of the operational priorities forced upon both businesses by Covid-19”.
The company currently anticipates that the contracts will be finalised in late spring, with Mothercare products going on sale in Boots stores from late summer.
Mothercare said it was drawing on the experience of entering administration in November to help it through the coronavirus crisis, adding that it remained in discussions with a number of lenders about possible new debt facilities.
“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,” said chairman Clive Whiley. “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,” he added.
Mothercare shares fell 4.9% in morning trading.