Mothercare in ‘rescue’ discussion with financial partners

London - Mothercare is currently in discussion with its banks, as it has become the latest high street retailer to succumb to difficult trading conditions. The retailer, which previously issued a profit warning in January, is in financial crisis after poor trading sees the retailer at risk of breaching the terms of its lending agreements.

At the moment Mothercare is seeking to raise the funds needed to supports its turnaround plan, which would see the retailer shut o nearly half of its 152 UK stores as it focuses on strengthening its e-commerce, which accounts for 42 percent of its revenue. The maternity and baby specialist is also exploring other sources of funding to help support its turnaround scheme.

Mothercare: "We are working with our financing partners with respect to our financing needs for FY19 and beyond"

“We are working together with all our stakeholders, including colleagues, franchisees, financiers, suppliers and pensions trustees on this next phase of our transformation and their part in delivering these plans,” said Mark Newton-Jones, Chief Executive Officer of Mothercare in a statement on Friday.

"The retail sector continues to face a number of pressures that are clearly having a profound impact on the sector as a whole. Against this backdrop, we are performing in line with our expectations and remain a cash generative business, but we also need to push ahead with our transformation strategy to meet our customers' needs and continue adapting to evolving shopping habits around the world,” he added.

Newton-Jones stressed that due to the support which has already been shown, the retailer remains confident that despite the challenges it faces , it will continue to thrive. The announcement comes after Mothercare warned that profits would fall at the lower end of its expectations.

Shares in Mothercare took a sharp drop on Friday after the announcement, which fe l l 15.5 percent to 21 p by the close of trading. “Reflecting the more challenging trading environment and our seasonal cash flows, we are working with our financing partners with respect to our financing needs for FY19 and beyond,” said Mothercare.

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