Sainsbury’s weighed up shock move for Mothercare
The supermarket giant’s deals team studied a potential move for the babywear chain.
Sainsbury’s is understood to have considered a shock takeover of struggling high street retailer Mothercare, it can be revealed.
The supermarket giant’s deals team studied a potential move for the babywear chain in recent months but stopped short of tabling an offer, people familiar with the matter told the Press Association.
Mothercare shares rocketed 17% to 20.5p on Thursday following news of the interest.
Sainsbury’s chief executive Mike Coupe has been in acquisitive mood since taking the helm in 2014, having snapped up Argos for £1.4 billion in 2016 and then ultimately deciding against pressing ahead with a takeover of wholesaler Nisa last year.
Sainsbury’s has also recently expanded the availability of its Tu clothing range, which includes babywear.
The clothing arm contributes almost £1 billion in annual sales to the grocery group and the addition of Mothercare would have seen the division beefed up considerably.
Mothercare’s stock market value is around £30 million and the news comes at a difficult time for the firm.
The group has been hammered on the stock market after warning over profits twice since the start of the year and revealing that crisis talks with its banks were under way.
Mothercare recently appointed KPMG as an adviser, with the accountancy giant drafted in to help it secure covenant waivers as it looks at additional sources of financing from its lenders HSBC and Barclays.
On Wednesday it parted company with its chief executive Mark Newton-Jones, replacing him with former Kmart and Tesco man David Wood.
Retailers across the board have been battered by weak consumer confidence off the back of soaring Brexit-fuelled inflation.
They have also had to contend with surging wage costs and eye-watering business rate hikes.
Since January, Toys R Us and Maplin have filed for administration, while fashion retailers such as New Look and Select have embarked on radical store closure programmes.
Sainsbury’s and Mothercare declined to comment.