Yahoo Finance Mothercare boss Mark Newton-Jones back - and ready to cut 800 jobs
The boss of ailing Mothercare, who on Thursday dramatically returned to the helm a month after he was ousted, has put 800 jobs at risk as he ploughs ahead with a rescue plan.
Mark Newton-Jones’s first move could see 50 stores shut via a company voluntary arrangement (CVA), a deal with creditors and landlords to prevent a struggling business going bust. It will also cut rent at 21 of its stores. Newton-Jones was sacked in April by chairman Alan Parker, who himself subsequently left the business. David Woods, brought in to succeed Newton-Jones, will now be managing director with Clive Whiley as chairman.
The accelerated plans to slim down the business — with 78 shops by 2020, down from 137 today — is tied to a complex £113.5 million refinancing deal. The toy and baby clothes seller has been struggling with changing shopping habits and rising costs.
It will tap shareholders for £28 million in July if the CVA goes through. It will then get an extension on its existing debt of £67.5 million from HSBC and Barclays if it raises the emergency cash from investors, and will borrow a further £18 million to have some funds available immediately.
Finance chief Glyn Hughes told the Standard: “Notwithstanding that there are a number of employees with jobs at risk, it enables Mothercare’s future to be secure.”
Mothercare, which was also due to report annual revenues, is hoping to free up £15 million within 18 months by closing stores, and release a further £10 million a year as part of its overhaul. Shares rose 23% to 26.3p.
“Whilst it is right to be positive about the restructuring efforts, the question is whether management can get online right and embark on a turnaround strategy that doesn’t just see it manage a slow decline,” Neil Wilson, an analyst at Markets.com said on Thursday.
Tiger boss Bier becomes new kid on the block
AS struggling Mothercare closes stores, a fledgling rival is setting up shop in London.
A new toy and clothing shop, ID Kids, today opened its doors in Wandsworth, next door to a Mothercare.
Launched by Philip Bier, the entrepreneur who brought the Danish upmarket pound shop Tiger to Britain, it will have a play area and sell family games.
Bier said: “Toys ’R’ Us and Mother-care have stood still. They haven’t changed with the world parents live in. We will offer something different.”
