Published: Thu, May 17, 2018
Markets | By Otis Pena

Mothercare boss to return in shock U-turn as retailer plans store closures

Mothercare boss to return in shock U-turn as retailer plans store closures

The company has not announced which stores will close, but has confirmed 800 jobs throughout the United Kingdom will be affected.

The babycare chain has revealed it will shut 50 across the United Kingdom, as part of a rescue plan.

Mothercare employs about 3,000 people across 137 outlets. The new plan would see it trade from 78 United Kingdom stores by 2020.

The company hopes that the shake-up will prevent it from falling into administration - but has not yet specified which stores will close.

A statement issued by Mothercare said: "We can't comment on individual store closures until all staff have been informed, which is our absolute priority".

In a statement, Mothercare said: "Recent financial performance, impacted in particular by a large number of legacy loss making stores within the United Kingdom estate, has resulted in a perilous financial condition for the group".

'These comprehensive measures provide a renewed and stable financial structure for the business and will drive a step change in Mothercare's transformation.

Interim executive chairman Clive Whiley said: "These measures provide a solid platform from which to reposition the group and begin to focus on growth, both in the United Kingdom and internationally".

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Mothercare also confirmed that Mark Newton-Jones, the chief executive it sacked last month, was to return.

It will follow New Look, Carpetright (Other OTC: CGHXF - news), House of Fraser, Prezzo, Byron and Toys R Us UK, all of which have announced CVAs in recent months in an effort to shed loss-making sites.

"However, there remains much to do and we must maintain a disciplined focus on cost control and cash generation throughout the business, but these measures provide a solid platform from which to reposition the group and begin to focus on growth, both in the United Kingdom and internationally".

Retailers across the board have been battered by weak consumer confidence off the back of soaring Brexit-fuelled inflation.

It has also had to contend with surging wage costs and eye-watering business rate hikes.

It is thought that David Wood, the former Tesco executive who had replaced Mr Newton-Woods, will shift to another position with the group, although it was not clear what this role would be this evening.

The company also has secured maturity extension to its committed debt facilities of GBP67.5 million and GBP8 million in new loans from some large shareholders.

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