PART B: CASE STUDY (15 MARKS) Case Study Carelessness at Mothercare Leaves Cupboard Bare Sales at Mothercare dived by 6 percent in three weeks after its move to a new hi-tech distribution center caused problems. The childrenswear retailer admitted that staff shortcomings meant its heralded autumn/winter clothing range had languished at the new Northamptonshire warehouse, causing huge stock shortages in its stores. Chief Executive Chris Martin, who was recruited to turn around the chain, admitted the setback was 'exceptionally frustrating given that like-for-like sales until this period had been up about 10 percent, and that the new range had been well received. It was doubly frustrating, he said, as management of the Daventry warehouse was sub-contracted to a third party, Tibbett & Britten. 'Some of their staff just weren't doing their job', said a source. Tibbett responded by placing a senior director at the building to sort out the problems and establish a proper flow of stock to the stores. Asked if he was considering legal action, Mr. Martin said: This is a five-year relationship. We are working it through together.' He added that a fifth less stock than usual had been in the shops but stressed that it was 'now coming through'. In a trading statement Mr. Martin revealed that sales rose by 9.6 percent for the 26 weeks to 28 September 2001, with like-for-like sales up by 7.6 percent. Brokers at Charterhouse Securities cut their recommendation from hold to sell after the news, but Seymour Pierce retail analyst Richard Ratner said, 'If they sort the warehouse problems out in the next few weeks I won't be unduly concerned, particularly as the 2.1 percentage point improvement in margin was better than expected.' Mothercare planned to continue with the roll-out of its larger Mothercare World format after Christmas 2001 Questions: 1. Do you agree with Tibbett decisions, and why? (4 Marks) 2. From your point of view, have they diagnosed the problem accurately? Give evidence about that? If not, describe the problem? marks) 3. How the relocation decision affect their sales, Safety stock levels? (4 marks) (7