Yahoo Finance Troubled Mothercare seeks City lifeline
Struggling baby chain Mothercare plans to tap long-suffering investors for tens of millions of pounds as it embarks on a sweeping restructuring plan to revive its fortunes.
The Telegraph understands the troubled firm will hit major shareholders with an equity share placing when it outlines a rescue plan alongside full-year results this week.
The chain 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.
Such a move could see Mothercare make swingeing cuts to its store estate, sparking potentially hundreds of job losses. The retailer has around 1,300 sites worldwide.
Profits are expected to crash 95pc to £1m, according to City analysts, when it announces annual results on Thursday. This underscores the monumental task facing David Wood, the new chief executive, who took the helm from Mark Newton-Jones last month.
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.
The retail industry has been left licking its wounds after being confronted by waning consumer confidence, the shift to online and escalating costs.
Hikes to the National Living Wage, inflation and rising taxes sparked by last year’s business rates revaluation have also put margins under intense pressure.
If Mothercare lines up a CVA, it will join other high street strugglers Poundworld and House of Fraser, which are targeting a revival through the restructuring process.
Mothercare said: “Mothercare continues to explore a number of options in relation to the group’s financing which will allow us to support and maintain the momentum of our transformation programme.”
