BlueGem's Mamas & Papas seeks rent reduction

Harriet Bailey
21 August 2014

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BlueGem Capital Partners-backed Mamas & Papas has put forward a company voluntary arrangement (CVA) proposal to reduce rental costs on 60 of its 63 stores.

The company has 63 stores in the UK and is seeking revised lease terms for 60 of those stores. Mamas & Papas stated all sites will continue trading as normal "in the face of a persistently tough trading environment".

It has also been reported that 90 job losses are planned for the company's head office in Huddersfield.

Overseen by Deloitte, the CVA will be voted on by landlords on 10 September.

BlueGem took a majority stake in Mamas & Papas in July for a reported £20m on condition that it cut rental payments and considered closing stores.

Earlier this year, Mamas & Papas launched a strategic review to ensure the future of the retail business. The business is now leading a consultation with all staff to improve operational efficiency.

Founded in 1981 by David and Luisa Scacchetti, Mamas & Papas sells a variety of baby clothing and nursery equipment from brands including Duplo, Leapfrog and Avent.

Its products are sold in more than 3,000 locations in 59 countries following new store openings in Russia, China and the Middle East. It has 1,300 employees.

The asset class has increased its focus on the childrenswear sector this year, as the segment faces significant challenges. In mid-July, Endless acquired multichannel childrenswear business Kiddicare from Morrisons. The £2m deal saw Morrisons make a significant loss on the business, for which it paid £70m in 2011.

At that time, Kiddicare was only available online, but the supermarket chain expanded the company into 11 bricks-and-mortar stores.

It is understood that Morrisons suffered a £163m write-down on its investment in the last financial year, which was said to be enough to cover all costs associated with the exit, including the leases to 10 stores.