Mothercare’s troubles showed no signs of slowing, as the retailer blamed “continuing challenges” for its Middle Eastern franchisees for sliding sales.
The business, which licenses the Mothercare brand abroad since the UK high street arm collapsed in 2020, saw sales fall by 15% in the six months to mid-September, to £132.5 million.
That follows a year where profits crashed by 88% to £1.1 million, despite a rise in sales. Mothercare said it believes it can make annual profits of £10 million in “more normal circumstances”.
Mothercare says it is in discussion with prospective lenders “to ensure that the group has adequate and appropriate financing for the future”. The company is paying an interest rate of 19.2% on its main loan facility, and continues to warn that its mounting interest payments create “material uncertainty” about the future of the business.
The group added that its main lender remains supportive about the possibility of a covenant waiver if it can’t repay all its debts.
Chairman Clive Whiley said: “We have a compelling market opportunity. Mothercare remains in an unparalleled position of being a highly trusted British heritage brand, with a significant opportunity to leverage this brand equity and grow our global presence beyond our existing franchise network.
“There is still work to do, but we are excited about the future prospects for Mothercare as we leave behind the turmoil of recent years."
The shares lost another 15.7% to 3.5p. The business, once valued at £7.5 billion, is now worth less than £20 million.
