Strategic Review of Mothercare Plc: Analysis of Global Finance

This presentation provides a strategic review of Mothercare Plc, a British retailer specializing in products for expectant mothers and children. It includes a company profile with segmental analysis, highlighting revenue and profit from UK and international operations, and a PEST analysis examining political, economic, social, and technological factors influencing the company. The review also covers the company's financial position and performance, including profitability, liquidity, and efficiency ratios, along with an evaluation of major financial risks such as foreign currency, credit, and interest rate risks. Furthermore, it explores financial strategies for cost reduction and organic growth, summarizing key points and suggesting possible alternative strategies for the company's future. The presentation concludes that while international operations perform well, the UK market needs strategic improvement and budgetary control tools should be employed to enhance profitability.

Global Finance Strategy

Overview of the business unit or Company profile
 Mothercare Plc is a leading British retailer that
specializes in products related to expectant mothers.
 It also offers general merchandise for children up to 6
years old and lays high level of emphasis on offering
quality products to the customers.
 Such business unit is listed on the recognized stock
exchange of London such as FTSE SmallCap. Company
has established stores worldwide with the motive to
attain success.

Segmental analysis and global foot prints
Revenue
(in £
million)
2017 2016
UK 459.4 459.7
Internationa
l
208.0 222.6
Profit (in
£ million)
2017 2016
UK (4.4) (6.4)
Internation
al
35.2 40.3

CONTD…
 From analysis, it has assessed that revenue
generated by UK stores are comparatively higher
over the international operations.
 However, profit generated by MotherCare Plc from
UK operations in the year of 2016 & 2017 was
negative.
 On the other side, such retail firm is attaining
suitable margin or return from global operations.

PEST analysis
Political factors
 Political stability
 Risk of military invasion
 Pricing regulatory mechanism highly influences
the level of customer service
 Product requirements and other mandatory
requirement in the retail sector
 Ant-trust laws pertaining to retail activities
Economical factors
 UK economy is growing after the recessionary
period
 Inflationary tendencies are also decreasing which
in turn places positive impact on retail firms
 Mothercare Plc has 358 stores in 45 countries.
Considering the same it can be presented that
global economic conditions also have significant
impact on the firm’s operations.
Social factors
 Changes regarding falling birth rates and small
family size have greater influence on the operations
of MotherCare Plc.
 Varied living standard or pattern of individuals
Technological factors
 Considering the significance of internet shopping and
convenience aspect Mothercare plc offers products or
services to the customer via online means.
 With the motive to enhance brand image and market
place such retail unit focuses on placing
advertisements on social sites considering the
aspect of technological advancement.

Financial analysis
Particula
rs
2016 2017
GP
margin
8.8% 8.8%
NP
margin
.94% 1.23%
2016 2017
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
Profitabiluity Ratios
in %

Liquidity analysis
Particu
lars
2016 2017
Current
ratio
1.40 1.31
2016 2017
1.26
1.28
1.3
1.32
1.34
1.36
1.38
1.4
1.42
Current ratio

Efficiency ratio analysis
Particulars 2016 2017
Total assets
turnover ratio
2.01 1.92
Fixed assets
turnover ratio
10.85 8.91
Inventory
turnover ratio
6.57 5.97
Total assets turnover ratio
Fixed assets turnover ratio
Inventory turnover ratio
0
2
4
6
8
10
12
2016
2017

Risk facing by MotherCare Plc
Major risks that are associated with the operations of
Mothercare Plc are enumerated below:
 Foreign currency risk
 Risk from treasury policy
 Credit risk
 Interest rate risk

CONTD…
Financial strategies for cost reduction and merger & acquisition
Cost reduction
 Needs to lay emphasis on undertaking modern budgeting methods
 MotherCare plc should focus on employing variance analysis tool which in
turn helps in exert control over expenses.
Organic growth strategies
 Needs to make online business more efficient which helps in enhancing
customer base
 Further, company should assess gap and focus on offering innovative
products to the customers

Summary
 International operations of the firm are good as
compared to UK in terms of sales and profit margin.
 Thus, firm needs to take strategic measure for making
improvement in the financial position of domestic
market.
 Profitability position of Mothercare Plc is not good so it
needs to make focus on employing budgetary control
tools.

REFERENCES
Annual report of MotherCare Plc. 2017.[Online].
Available through: <
http://www.mothercareplc.com/~/media/Files/M/Mother
-Care/documents/preliminary-results-2016-17.pdf >