DHL Supply Chain will do its “utmost” to protect the jobs of staff working on its Mothercare contract, the logistics firm pledged this week following the retailer’s announcement that it is to put its UK business into administration, threatening the closure of 79 stores.
DHL Supply Chain has been Mothercare’s distribution partner for almost 30 years, handling national distribution for over 300 stores and international franchises from its site in Crick, Northamptonshire.
In response to Mothercare’s announcement this week DHL said: “Following today’s news, in the coming weeks we will offer every assistance to Mothercare’s administrators to maximise the possibility of the business having an ongoing and successful future, while doing our utmost to safeguard our colleagues on the account.
“In the short term, we will work with the administrator to support deliveries to customers who have already placed orders.”
In a statement Mothercare Group said that following a “root and branch” review and talks with potential partners over the summer “it has become clear that the UK retail operations of the group, which today includes 79 stores, are not capable of returning to a level of structural profitability and returns that are sustainable for the group as it currently stands and/or attractive enough for a third party partner to operate on an arm's length basis. Furthermore, the company is unable to continue to satisfy the ongoing cash needs of Mothercare UK.”
In the same week, Arcadia Group, another major DHL Supply Chain retail client, is racing to refinance the £310m mortgage on its flagship Oxford Street store, ahead of Christmas. The repayment is due next month.
Earlier this year, as part of a CVA, Arcadia, which includes fashion brands Topshop, Topman, Evans, Burton, Wallis, Dorothy Perkins and Miss Selfridge, was forced to shut down 48 stores and negotiate rent reductions on 194 stores.
Arcadia Group is also restructuring its distribution strategy, moving brands to a new 1.2m sq ft £29.4m distribution centre in Daventry. Topman has already moved to the site, while Topshop is set to join next spring, which has raised speculation the group is preparing to sell off some of its brands.
Logistics analyst Frank Proud of Apex Insight said operators need to ensure that they are not overly exposed to the high street as consumers continue to shift to online shopping: “For logistics operators serving the high street stores this is a risky time and a lot must be wondering what happens next. I would expect to see companies starting to put risk premiums into contracts although that may be difficult to do that and win the deal so there is an element of risk in adopting that strategy.”
One leading haulier said: “Ever since XPO lost £30m when House of Fraser went under, the logistics sector has become very wary of high street retail.”
