Yahoo Finance Mothercare boss defends cutting another 100 jobs as turnaround plan ramps up
The newly reinstated boss of Mothercare has defended the decision to put another 100 jobs at risk as he accelerates plans to shut dozens of shops in a desperate attempt to keep the ailing retailer afloat.
Mark Newton-Jones, who was sacked as chief executive in April but rehired the following month, said Mothercare needed to close 60 of its 137 UK stores by next summer as it battles against a “brutal” downturn afflicting Britain’s high streets.
The chain also plans to raise £32.5m of emergency funding from investors, up from a previous plan to request £28m.
Mothercare had previously said it would close 50 stores over the next two years as part of a rescue deal agreed with its lenders and landlords last month but decided to speed up plans and exit 10 more after a proposal to restructure one of its subsidiaries was blocked.
Children's World, a shell left over from a previous acquisition, which owns 22 Mothercare stores, will be put into administration. Thirteen of its stores will be transferred to the main company and the rest will be closed in the coming months.
The new closures bring the total number of Mothercare jobs at risk to 900.
Mr Newton-Jones said: “What we can’t escape here is these are people’s lives that will be turned upside down as a result of this. It’s a painful decision to make for many of our colleagues but it’s the right one to secure the future of the company.”
Mothercare, which sells baby clothes, cots, car seats and nappies, has been squeezed by competition from supermarkets as well as online players such as Amazon, and has already slashed its store numbers from 425 10 years ago.
Its shares, which have lost more than 90pc of their value over the last three years after a series of profit warnings, were down 6pc at 27p in noon trade.
Mr Newton-Jones, who first joined as chief executive in 2014, said the business’s UK stores had suffered from a “severe lack of investment” as the company focused on growing its overseas arm, which now accounts for two thirds of revenues.
The new financing will be raised through an issue of new shares at 19p each, well below Mothercare’s close price of 28.6p on Friday.
Russ Mould of investment firm AJ Bell said: “How long-standing shareholders must wish their board had accepted a 300p bid from US peer Destination Maternity back in 2014. Claims that bid undervalued the business and its ‘attractive prospects’ look pretty laughable now.”
