Mothercare shares plummet but company nears completion of debt refinancing
- The mother and baby products retailer went bankrupt in 2019
- In the UK, it sells its products, such as baby clothes and toys, through Boots.
Mothercare shares plunged on Friday after the beleaguered retailer posted annual losses.
However, the group told investors it has almost completed the refinancing of its debt, which became unmanageable after 14 consecutive interest rate increases by the Bank of England.
The mother and baby products retailer is in talks with several stakeholders and financial partners.
The Watford-based company has endured a torrid few years, culminating in its UK division entering administration in 2019 amid mounting losses and fierce competition from supermarket chains.
It is now run as a franchise business. In the UK, it sells its products, such as baby clothes, toys and bedding, through Boots.
The Watford-based company has been through a torrid few years, culminating in its UK division entering administration in 2019.
Mothercare saw a 16 per cent decline in global retail sales to £322.7m during the year to March, taking it to a statutory loss of £100,000 for the year from a profit of £12.1m for the year former.
The decline was driven by challenges in its Middle East markets, as well as its exit from Russia following the conflict in Ukraine.
Mothercare Stock fell 15.66 per cent to 3.50p in afternoon trading on Friday.
The London-listed company said the pandemic had had a major impact on the group and its franchise partners had to clear out old inventory, reduce costs and reduce the level of investment they can make in Mothercare.
Mothercare said: “This is likely to mean a return to pre-pandemic trading levels will take longer and we are working with our partners to assist that recovery.”
It comes after the interest rate on its current £19.5m four-year loan facility soared to 19.2 per cent. He stressed that he does not need additional liquidity, but that it would be “preferable to accommodate business development and unforeseen challenges.”
The group aims to make an operating profit of £10m from its franchise operations.
About 30 million babies are born worldwide each year, which presents opportunities for the brand, he said.
Mothercare added that it does not yet operate in eight of the world’s top 10 markets, ranked by wealth and birth rate.
Clive Whiley, chairman of Mothercare, said: ‘We have a compelling market opportunity.
“Mothercare remains in an unrivaled position as a highly trusted British heritage brand, with a significant opportunity to leverage the value of this brand and grow our global presence beyond our existing franchise network.”
In June, then-Mothercare boss Daniel Le Vesconte resigned with immediate effect after less than five months in the role amid continuing turmoil at the maternity products retailer.
Le Vesconte became chief executive in mid-January, making him the first person to hold the role since Mark Newton-Jones left in early 2020.
It came shortly after the company reported a significant drop in its half-year profits and revenue following its exit from Russia, where it made between a fifth and a quarter of its global retail sales.
Whiley added: “There is still work to do but we are excited about Mothercare’s future prospects as we leave the turmoil of recent years behind us.”
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