Mothercare reveals updated restructuring plan

Mothercare is in discussions with new debt providers for new recapitalisation facilities and will move its head offices as part of its transformation plan.

The baby care and maternity retailer said that it remains on track to become a profitable international franchise operation, via an “asset-light model” of operations in around 40 international territories, refocusing on “core competencies of brand management and the design, development and sourcing of product to help grow the Mothercare business with its global franchise partners”.

As of 19 June, the company had a total secured debt of £24 million in a revolving credit facility, with other guarantees and letter of credit amounting to £18 million. It went into administration in November, resulting in 2,500 job losses and 79 store closures.

“We currently estimate that approximately two thirds of our partners’ global retail locations are now open following local guidance in their respective territories,” explained today's statement.

Mothercare's UK franchise deal with Boots has been delayed due to the Coronavirus.

It has also agreed to sub-lease a substantial part of its main Daventry warehouse to a third party for a short-term, and it will move to a "smaller and more cost-effective" head office in early August, leaving the existing lease on its Watford headquarters.

Chairman Clive Whiley commented: “We have carefully managed our business over the past three months, to mitigate the impact of the COVID-19 pandemic on our cash flows and liquidity during this period of global crisis which is reflected in our unchanged bank debt position since March.

“Whilst we have not been immune to temporary store closures in almost all of our territories over the period, I am pleased that we are seeing the reopening of our partners’ stores - at the same time, we continue to take action to reduce our cost base and address legacy issues, helping with our return to being a profitable and sustainable business."

Mothercare is also now shortlisting candidates for a permanent chief executive, after Mark Newton-Jones left in January. Interim boss Glyn Hughes ruled himself out of the search and will depart on 30 June.

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