What’s gone wrong at Mothercare?

This article about Mothercare asks whether it can be reborn, following a series of errors and decisions which have gone wrong. So it makes a very good case study from which students can identify decisions which were made, and turned out to be mistakes, and also actions which were not taken, and probably should have been. Their sales have been falling for years, they have restructured and reduced staffing, they issued a profits warning in January which led to £112mn being knocked off their share value, and now their Chief Executive has resigned - and yet they have a well-respected brand and the nature of their market means that their products are in constant demand.

Key points identified here are that their costs are too high - with a strong, and expensive, presence on the high street when most of their competition is now from online retailers with much lower costs. Strategic decisions such as the acquisition of the Early Learning Centre - another well respected brand offering complementary products - may actually have added to the problem rather than gaining from synergies, and their international businesses are not doing well - while the weakening of the sterling exchange rate means that imported goods for sale in the UK are costing them more - another factor squeezing their profits.

There is an opportunity here to conduct a SWOT analysis on the basis of this article, and make recommendations about a change of strategy: If Mothercare is to escape the attentions of asset-stripping private equity, what strategy would a BUSS4 student recommend for them?