Exiting mobility retail costs Simplyhealth in excess of £5million
Following the decision to close down its retail proposition in October 2017, Simplyhealth has revealed in its annual report the total cost of exiting the retail business, citing that shifts to the retail landscape changed the proposition’s sustainability.
The end of retail operations
Having been operating in mobility retail since 2005 through its network of stores, telephone and online under its own wholly-owned subsidiary, Totally Active Limited, the company rebranded its retail proposition into The Unlimited Company in March 2016.
Describing the new brand as bringing a unique, modern approach to mobility retail, Simplyhealth reopened a total of seven stores across the UK under The Unlimited Company moniker over the 16-month period that followed.
On the 17th of October 2017 however, following a review of current and expected trading performance, the Directors took the decision to shut down its new retail brand, leading to the closure of 10 stores.
On the 24th November 2017, the Directors closed the remaining five retail stores operated by Totally Active Limited, operating under the Care and Mobility banner, continuing to trade online and provide consultancy services customers until cessation of trade in February 2018.
Exceeding £5 million
According to the report, the total cost of exiting the retail business was £5.2 million, with a cost of £1.2 million to cover the redundancy of staff.
The largest cost associated with the closure of its retail operations were lease provisions at £2million and impairment of goodwill, tangible & intangible assets of £1.5 million.
Additionally, £400,000 was attributed to a reduction in stock to net realisable value.
A changing healthcare landscape
Highlighting a shift in the marketplace, Ben Kent Chief Financial Officer, said: “At the end of 2017 we made the difficult decision to close The Unlimited Company, because although we still saw a need to support customers to maintain their independence, the retail landscape had changed. Large mainstream retailers are now providing mobility products and daily living aids, and customers are purchasing these products in new ways, different from the model that we had developed.”
In recent months, companies such as Tesco, the Bathstore, Argos, as well as major online providers such as Amazon, are becoming more active in the mobility industry.
He continued: “Making a decision like this is never easy, and we remain committed to supporting customers in this space, but good governance is about making decisions that ensure we are sustainable and able to meet the long-term needs of our customers.”