Mothercare plc - Strategy

Our aim is to build the Mothercare group into the world's leading specialist retailer of parenting and children's products. The acquisition of the Early Learning Centre in June 2007 was a key step in the development of this proposition. The group's aspirations will be achieved through:

developing innovative and exciting own-brand products under both the Mothercare and Early Learning Centre brands;
the best in class expertise and specialism of our staff; and
the successful delivery of the growth strategy set out below.

growth strategy

The growth strategy of the Mothercare group is focused on four key levers that will deliver the potential of the Mothercare and Early Learning Centre brands.

maximising the synergies from the integration of the Early Learning Centre;
restructuring the combined Mothercare and Early Learning Centre property portfolio;
continuing the rapid growth of Direct; and
driving the international reach of the Mothercare and Early Learning Centre brands.

The largest single synergy from the acquisition of the Early Learning Centre is the optimisation of the combined UK store portfolio. A significant element of this is the insertion of the Early Learning Centre into key Mothercare out of town stores and larger high street stores. 80 Early Learning Centre inserts are expected to be trading in Mothercare stores by Christmas 2008.

The second integration synergy is to develop the Early Learning Centre brand Internationally through Mothercare's existing franchisee networks.

The third synergy from the acquisition is growing margin by the efficient exploitation of our sourcing offices. Through the acquisition of the Early Learning Centre we acquired a state of the art sourcing office based in Hong Kong and we have already invested in this facility, which is now responsible for directly sourcing all of the group's toys.

The fourth synergy is the integration of the multi-channel operations across the two brands.

The second Mothercare growth lever is the strategic restructure of the combined UK property portfolio. Inserting Early Learning Centre stores within Mothercare on its own helps to rightsize the Mothercare chain; taking the best sites from both brands, and implementing a major restructure of the combined store portfolio.

The high street portfolio will also be addressed by consolidating the two brands into one store where we have both a Mothercare and an Early Learning Centre on the same high street or nearby, creating a more profitable store with two brands in the one location.

Direct will grow by increasing the product range available online. Mothercare now has over 350 types of pushchair and over 300 car seats available online. The extension of the success of our Direct business into our international markets is being progressed.

The focus for Early Learning Centre is on web site optimisation and the introduction of web-in-store.

The fourth lever in our growth strategy is the globalisation of our two brands.

The International business will grow through building like-for-like sales, opening new stores in existing countries and opening new stores in new countries.

With the Early Learning Centre there is an opportunity to grow rapidly the brand's global presence through leveraging the existing Mothercare franchisee network.

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growth strategy