Shares in Mothercare shot up more than 11 per cent last night after reports emerged that Sainsbury’s was considering a swoop on the troubled retailer.
Sainsbury’s, which is the second-biggest supermarket in the UK, is said to have been weighing up a bid for the childrenswear chain in recent months.
The reports came as welcome news to investors, who have seen shares plummet 93 per cent since peaking at 295p in July 2015 after two profit warnings earlier this year.
Boost: Struggling Mothercare saw shares soar 11% on reports Sainsbury’s has been plotting a big
Last night Mothercare’s share price was just 19.32p.
A move by Sainsbury’s to snap up Mothercare would likely bring a significant boost to the supermarket’s clothing division which contributes almost £1billion in sales to the group annually.
Sainsbury’s recently expanded its Tu clothing range, which includes babywear. In 2016 Sainsbury’s forked out £1.4billion on Argos, buying its 739 stores and opening concessions within its supermarkets.
But a purchase of Mothercare would likely be seen as a major gamble for Sainsbury’s and a millstone around the supermarket’s neck.
The reports of a possible takeover come just days after Mothercare kicked out its chief executive and replaced him with former Tesco director David Wood.
Mark Newton-Jones, 49, who led the company for four years, was dismissed on Wednesday just hours before the announcement was made to the London Stock Exchange.
Mothercare was forced to call in accountants last month to advise on a refinancing with lenders as it worked to stave off a total collapse of the business.
Mothercare and Sainsbury’s declined to comment.
Nectar Card Revamp
Sainsbury’s is to revamp its Nectar card scheme in a move that will see loyal and frequent customers rewarded with the greatest number of points.
Shoppers will no longer simply receive one point per £1 spent in store: instead, they will be rewarded based not just on spending, but how frequently and how long they’ve been shopping with the retailer.
Sainsbury’s is trialling the revamp on the Isle of Wight from today.
The supermarket giant bought the Nectar business in February for £60m from Canadian firm Aimia.