Mothercare says it is now in a position to focus on its customers and on revitalising its brand through multichannel retailing following the completion of its CVA and raising £32.5m to refinance the business. The nursery retailer also plans to improve the design and value of its products while at the same time investing in its people.
Mothercare, a Top50 retailer in IRUK research, expects to trade from a UK estate of 77 stores, as well as online, following the closure of 60 stores with the loss of around 900 jobs. Its Childrens World business has gone into administration because a CVA could not be agreed with respect to that business. Thirteen of 22 Children World stores will be transferred to other members of the Mothercare group.
Chief executive Mark Newton-Jones says the retailer has finalised its restructuring and refinancing arrangements after a "very challenging period". This, he says, ensures "that the transformation of the Mothercare brand we started four years ago can now be completed. Mothercare is a great British brand with over 50 years of heritage and we now have the financing in place to take it forward for many more years to come."
He added: "We have seen an unprecedented period for UK retail and we have not been alone in facing a number of strong headwinds. I’m pleased to say however that we are now in a position to refocus on our customers and improve the Mothercare brand both in the UK and across the globe. We have exciting plans ahead to revitalise the brand through enhancing our product ranges, improving our design and value, developing our digital and multichannel proposition and investing in its people. Our goal remains clear, to be the leading global specialist for parents and young children."
Mothercare said, when it first announced the CVA earlier this year, that while it had had a transformation plan in place since 2014, it had not moved fast enough. Now its store estate is set to be rebalanced, reflecting the fact that in its latest financial year 43% of sales took place online with 69% of those via mobile devices. Today the retailer said that current trading continued to follow patterns seen in the second half of its last financial year: challenging in the UK with "some stability visible in our international operations".
The refinancing announced today has come from existing shareholders in the form of an equity fundraising, while debt facilities have been extended to £67.5m, once the fundraising has completed.
Interim executive chairman Clive Whiley said: "When I joined the business just three months ago, Mothercare faced a bleak future with growing and pressing financial stresses upon the business. We have worked tirelessly as a team to get to where we are today and this fully underwritten equity issue marks the end of this initial phase, returning the group to financial stability."
He added: "The last three months of hard work and progress have put in place the foundations to get Mothercare back to where it should be was a fit for purpose business with a stronger and more efficient structure both for our UK business and our international franchisees."
Image courtesy of Mothercare