UK's Mothercare to close 50 more stores in restructuring plan

A Mothercare store in Basingstoke Hampshire as it is announced the high street retailer is to close 50 stores and re-hire it's former chief executive Mark Newton Jones who was sacked just weeks ago

In its effort to save the company, former chief executive, Mark Newton Jones, who was sacked just weeks ago has been re-hired.

STAFF in Mothercare's store in Llandudno are in the dark about their future as the company plans to close 50 stores in the UK.

The children's goods retailer has faced intense competition from online retailers and supermarkets in its main United Kingdom market as well as rising costs.

Mothercare declined to comment though it is now confirmed that Newton-Jones, who stepped down as CEO in April, a month after Mothercare warned on full-year profit, is to return to the firm. As many as 800 jobs could be lost.

The sub-£50mln company now has 137 stores up-and-down the United Kingdom but wants to have a portfolio of just 73 by 2022. It will have just 78 by 2020, down to 72 two years after that.

The CVA route, which allows firms to avoid insolvency or administration, has already been taken this year by fellow United Kingdom retail strugglers - fashion chain New Look, floor coverings group Carpetright and department store group House of Fraser.

Mothercare will implement the reorganisation of its United Kingdom high street presence through an insolvency mechanism called a Company Voluntary Arrangement (CVA), which will be overseen by KPMG.

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Brutal trading conditions are also partly responsible for the collapse of Toys R Us UK, electricals group Maplin and drinks wholesaler Conviviality.

Over the a year ago Mothercare's shares have sunk by 83 percent.

‎"The recent financial performance of the business, impacted in particular by a large number of legacy loss-making stores within the United Kingdom estate, has resulted in an unsustainable situation for the Mothercare brand, meaning the group was in clear need of an appropriate resolution".

Mothercare said that the process to implement the CVA Proposals is expected to complete in July 2018 with the CVA creditor meetings expected to be held on June 1, 2018.

That includes £28 million it is seeking to raise from shareholders, an extension of its existing debt to £67.5 million, and £18 million in shareholder and trade partner loans. The equity issue is conditional on the CVA going through.

That won't be the only measure Mothercare wants to introduce; it also wants landlords of 21 other sites to agree to "material" rent reductions in a bid to dramatically cut its cost base.

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