Mothercare to sell products via Boots website and stores

Mothercare has finalised a franchise agreement with Boots UK which will enable the baby care brand to sell its full-range of products via Mothercare items will also be available in a large number of Boots UK and Ireland stores from this autumn.

The agreement will be in place for at least 10 years.

The move is part of Mothercare’s plans to reshape its business following its administration last year which resulted in the closure of its 79 UK stores and the loss of 2,500 jobs.

The group aims to establish “a more sustainable and less capital-intensive business model going forward”, in which its franchise partners pay for products directly to manufacturers.

In a statement, the retailer said: “Boots is at the heart of one of the largest healthcare businesses in the world and Mothercare will dovetail well as the specialist brand for parents and young children in both Boots stores and online.”

Mothercare outlined its plans to create a franchise model in an update in June, revealing it was in discussions with Boots to become a partner.

Mothercare  also revealed it has entered into a new 20-year franchise agreement with the Alshaya Group.

Mothercare commented: “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.

“We believe this new way of working will ultimately have the added benefits of improving pricing for franchise partners, which in turn should better incentivise retail sales growth and assist our manufacturing partners in reinstating credit insurance for future seasons.”

In the update, Mothercare added that discussions are continuing regarding the potential refinancing of the Group’s debt facilities.

Last month, Boots announced 4,000 job losses across its head office, stores and optician teams as part of a focus on digital services in light of the Covid-19 pandemic.