Yahoo Finance Mothercare set to accelerate store closures in overhaul bid
Embattled baby chain Mothercare plans to accelerate store closures and go cap in hand to investors as it puts the finishing touches to a major overhaul.
The troubled retailer confirmed a report by The Telegraph that it will tap shareholders for cash as part of a range of measures set to be announced alongside its annual results this week.
The business is also expected to unveil plans for a company voluntary arrangement (CVA), a type of insolvency process that allows companies to shut stores and drive down rents.
It is understood a CVA would help the firm speed up efforts to cuts its UK store estate from 137 to a target of between 80 to 100, potentially triggering hundreds of job losses.
In a stock market announcement, Mothercare said it was “finalising a comprehensive restructuring and refinancing package to put the business on a stable and sustainable financial footing”.
The package is expected to include “new committed debt facilities, an underwritten equity issue and access to other sources of capital”.
Investors sent shares down 6pc to 18.7p in lunchtime trade.
Profits are also expected to crash 95pc to £1m, according to City analysts, when Mothercare announces annual results on Thursday.
Mothercare has been grappling with bitter conditions on the high street and an incursion from rival retailers into baby clothing, toys and pushchairs.
David Wood, the new chief executive who took the helm from Mark Newton-Jones last month, has been handed the colossal task of guiding the retailer to firmer financial ground.
Mothercare has been working with investment bank Rothschild to explore alternative financing options beyond its current lenders. Accountancy giant KPMG is handling separate discussions with HSBC and Barclays over Mothercare’s existing debt.
Pockets of the retail sector have been suffering after being confronted by waning consumer confidence, the shift to online and escalating costs.
If Mothercare lines up a CVA, it will join high street struggler House of Fraser, which is also plotting a restructuring.
Flooring specialist Carpetright has put 300 jobs in the firing line and plans to close 81 stores after creditors overwhelmingly backed a CVA, while New Look has used the procedure to cut its footprint on the high street.
