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Mothercare to close 50 UK stores

RBR Staff Writer Published 18 May 2018

Mother and baby products retailer Mothercare said that it will close 50 stores as part of restructuring of the UK store portfolio.

The move, which will put at least 800 jobs at risk, is part of Mothercare’s company voluntary arrangement (CVA) that it had agreed with its creditors.

Mothercare is the latest retailer in the UK to feel the heat of consumer downturn and the rise of e-commerce.

The CVA will help the company from formal insolvency proceedings, while allowing it to have more time to reduce its costs which includes store closures, rent reductions, etc.

As part of the restructure, the company plans to close down 50 of its least successful stores, with rent reductions for 21 more stores.

With the restructuring, Mothercare’s store portfolio is expected to fall from the present 137 to 78 by 2020 and to 73 by 2022.

The company has agreed for a revised debt of £67.5m with HSBC and Barclays, whose maturity has been extended up to 2020 year end. Mothercare also intends to raise £28m by issuing shares.

Former CEO Mark Newton-Jones will be reinstated alongside David Wood becoming Group Managing Director. Both will be the members of Mothercare’s board.

Mothercare interim executive chairman Clive Whiley said: “‎The recent financial performance of the business, impacted in particular by a large number of legacy loss making stores within the UK estate, has resulted in an unsustainable situation for the Mothercare brand, meaning the Group was in clear need of an appropriate resolution.

“Since my appointment as Interim Executive Chairman, my priority has been to galvanise support from all of our stakeholders and provide a solution to the short-term problems facing the Company.”

He stated that these comprehensive measures will offer a renewed and stable financial structure for the business and can help in driving a step change in the company’s transformation.

Image: Mothercare store in the UK. Photo: Courtesy of Betty Longbottom / mothercare - Woolshops/Wikipedia.org