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Thu 19 May 2011 11:35 AM

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Kuwait’s Alshaya stays mute on Mothercare expansion plans

UK firm plans to shrink UK stores, eyes overseas growth in bid to tap growing populations

Kuwait’s Alshaya stays mute on Mothercare expansion plans
Mohammed Abdulaziz Alshaya, executive chairman of Kuwait retail giant MH Alshaya

Kuwait’s
MH Alshaya Co has stayed mute on news that one of its biggest brands, maternity
retailer Mothercare, plans to close a quarter of UK stores and focus on
overseas growth.

Alshaya,
which operates the Mothercare franchise in the Middle East, declined to comment
on whether the company plans to ramp up its retail outlets in the lucrative Gulf
region.

The
chain currently has a presence in all six Gulf states, alongside stores in
Jordan, Lebanon and Egypt.

It
operates 162 outlets across the Middle East, including 72 in Saudi Arabia, its
largest regional market.

The
British firm said Wednesday it would close about 110 stores in the UK as a
collapse in UK profits eclipsed strong growth in overseas markets.

The
firm, which issued profit warnings in January and March, said it would shrink
its UK estate as it focuses on high growth markets like China, India, the
Middle East, Eastern Europe, and Latin America, where it can benefit from
higher birth rates and burgeoning middle classes.

The
mother and baby products firm said underlying pretax profit fell 23.4 percent
to £28.5m ($45.9m) in the year to March 26. By contrast, its worldwide sales
increased 7.1 percent to £1.16bn ($1.87bn).

"UK
retailing is going through a real revolution at the moment, particularly in the
high street. Trade is being taken by out-of-town stores and by the Internet, so
there’s just fewer people shopping in town,” said Mothercare CEO Ben Gordon.

"At
the same time international is booming ... 99 percent of the world's babies are
outside the UK so that's really where the huge opportunity for Mothercare lies.”

The
firm, which currently trades from about 900 overseas stores in 54 countries,
forecast international retail sales growth of 15 to 20 percent in 2011/12, with
150 new store openings.

Alshaya
said in November it planned to open 1, 250 stores over the next five years,
creating an estimated 4,000 jobs.

The
retail conglomerate holds the franchise for 55 global brands, including
H&M, Debenhams, TopShop, Pizza Express and Pottery Barn

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Mohammad Husein 8 years ago

Middle East market lacks vision which explains all the franchises in the middle east. Mothercare has no competition in the middle east which explain why its profitable in that region. Alshaya Group has some of the best franchises in USA but i think its time to start developing department stores concept in the middle east which will have most of these brands and more under one roof.

Bernard Thomson 5 years ago

The decline of Mothercare in the UK simply is a sign of the fact that the concept is no longer appealing: Sure there's a downturn but more modern and innovative retailers still manage to grow their business. The Middle East and China, for example, go through an earlier stage of the cycle that's all: In five years they'll start closing stores in these regions as well if stores stay at this old-fashioned level. There are many smaller upcoming retailers that have the opportunity to grow out to the new market leader and become the better Mothercare: In store design, in offering, in customer service and in the integration of online and offline. If AlShaya really believes in the M.E. babymarket (as they should) they'd better look around locally and pick up one of the gems that are popping up in the Middle East! Why continue paying royalties to a nearly bankrupt UK Franchisor while you could actually own concepts that are much better geared to the future and the local markets?

Maya 3 years ago

In my openion Mothercare is the best store for babies products and clothes no other store can beat it , it is very successful and popular here in ME . Thank you M.H alshaya.