Mothercare To Raise £100m For UK Revival

Mothercare (LSE: MTC.L - news) is planning to close more UK stores as it steps up efforts to bring the business into the digital age.

The loss-making retailer of clothes and other goods for parents and young children said it was to fund the revamp through a £100m rights issue which would also reduce its debt burden.

Its new boss, Mark Newton-Jones, took over earlier this year as Mothercare's attempts to fight off strong competition, particularly online, faltered under Simon Calver who quit in February.

Mr Newton-Jones said it was his aim to create a digitally-led business, supported by a modern store estate.

The company, which also owns the Early Learning Centre brand, is to reduce its core UK estate of 110 out-of-town stores and 50 in-town sites by another 60 stores - though up to 20 new stores would open in better sites.

It had already closed more than 153 loss-making stores under Mr Calver but the UK business continued to make a loss - totalling £26.3m in its last financial year.

Although its 1,500 international franchise partners helped offset the problems.

Mothercare said a refit programme would introduce digital screens, video walls, iPads, customer Wi-Fi and click and collect enhancements.

Mr Newton-Jones said: "Our ambition is for Mothercare to become the leading global retailer for parents and young children.

"The support of our shareholders will allow us to deliver on this ambition."

Its share price fell sharply on Tuesday following news of the rights issue.

At its height, Mothercare was almost a £1bn firm but value has eroded to below £200m.