(Alliance News) - Mothercare PLC on Thursday said it plans on changing its business model to be more sustainable and less capital intensive as well as announced the signing of a new franchise agreement.
The retailer of clothing and homeware products, nursery equipment and food services said it has held discussions with its international franchise and manufacturing partners to modernise and improve commercial relationships.
The company aims to improve pricing and quality for its franchise partners and the reduce financial and operational risk for its manufacturing partners.
The company said: "This new model results in our franchise partners contracting to pay for products directly to our manufacturing partners, thus removing the timing mismatch we were experiencing with the reduction in our payment terms and so improving the group’s working capital requirements."
Mothercare believes this will improve pricing for franchise partners which in turn should better incentivise retail sales growth as well as assist its manufacturing partners in reinstating credit insurance for future seasons.
The new model is to come into effect from the autumn and winter season this year.
Mothercare also inked a new 20-year franchise agreement with Alshaya Group, the company's "most significant" franchise partner.
Mothercare remains in talks over the refinancing of its debts, estimated to be up to GBP10 million.
The company mentioned that the dates for the publication of its audited annual report and accounts for the year ended March 28 are still being reviewed after disruptions from Covid-19. Notice of the general meeting and publication of the annual report and accounts will be given "in due course" with the annual general meeting to be held no later than September 30.
Mothercare shares were up 3.1% at 5.94 pence each on Thursday morning in London.
By Greg Roxburgh; gregroxburgh@alliancenews.com
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Mothercare (MTC)