Ir­ish Mother­care un­af­fected as 50 UK stores to shut

Irish Independent - - Business - El­lie Don­nelly

THE com­pany that op­er­ates the Mother­care brand in Ire­land says shops here won’t be af­fected, af­ter the strug­gling Bri­tish re­tailer said it will close over a third of its stores there.

The UK busi­ness yes­ter­day an­nounced the re­turn of the chief ex­ec­u­tive who was sacked just five weeks ago.

Sales and profit in the UK have been ham­mered by in­tense com­pe­ti­tion from su­per­mar­ket groups and on­line re­tail­ers as well as by rising costs, re­sult­ing in what it called “a per­ilous fi­nan­cial con­di­tion”.

Mother­care’s shares had lost

83pc of their value over the last year but rose as much as 34pc yes­ter­day af­ter it de­tailed a

£113.5m (€130m) re­fi­nanc­ing, in­clud­ing a planned £28m eq­uity fundrais­ing, and said Mark Newton-Jones would re­turn as CEO.

Newton-Jones was ousted as CEO on April 4 by then chair­man Alan Parker. Parker him­self abruptly re­tired on April 19.

Newton-Jones’s re­place­ment as CEO – for­mer Tesco ex­ec­u­tive David Wood – will be­come group man­ag­ing di­rec­tor.

Mother­care said it would seek cred­i­tor ap­proval for so­called com­pany vol­un­tary ar­range­ment (CVA) pro­pos­als that would en­able it to shut 50 stores and se­cure rent re­duc­tions on

21 oth­ers. As many as 800 jobs could be lost. In Ire­land a sep­a­rate busi­ness has the right to trade un­der the Mother­care brand. Mother­care Ire­land is a sep­a­rately owned and fam­ily-run busi­ness, started by David Ward in 1992 and is now run by his two sons, Jonathan and Ben, and daugh­ter Laura.

Man­ag­ing di­rec­tor Jonathan Ward said the UK de­vel­op­ments will have no im­pact here.

“Mother­care UK have this morn­ing re­leased their re­fi­nanc­ing and UK store re­struc­tur­ing plan,” Mr Ward said.

“Mother­care Ire­land is a com­pletely sep­a­rate com­pany and, as a re­sult, our 15 Ir­ish stores are un­af­fected by any plans in the pro­posal and will con­tinue to trade as nor­mal.”

Mother­care Ire­land is one of the orig­i­nal part­ners of the Mother­care In­ter­na­tional Group, and is cur­rently the fifth-largest part­ner in the world.

The Ir­ish busi­ness ex­ited an ex­am­in­er­ship in Oc­to­ber 2015 that re­sulted in three stores be­ing closed at Black­rock and Jervis Street in Dublin and Cruises Street in Lim­er­ick and sig­nif­i­cant rental re­duc­tions be­ing achieved.

Ear­lier this year, the di­rec­tors of the Ir­ish busi­ness said it had achieved a sig­nif­i­cant turn­around last year.

That was af­ter new ac­counts for Mother­care Ire­land show that the com­pany recorded pre­tax prof­its of €488,711 in the 12 months to March 26, 2017 last.

In the UK, Mother­care trades from 137 UK stores, down from nearly 400 a decade ago. The new plan would see it trade from 78 UK stores by 2020.

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

Bru­tal trad­ing con­di­tions for store groups – with pres­sure on UK dis­pos­able in­comes com­pound­ing in­tense com­pe­ti­tion – are also partly re­spon­si­ble for the col­lapse of Toys R Us UK, elec­tri­cals group Maplin and drinks whole­saler Con­vivi­al­ity.

Shares in Mother­care were up 5.4 pence at 25.4 pence each by yes­ter­day af­ter­noon, valu­ing the busi­ness at £46m.

“The re­cent fi­nan­cial per­for­mance of the busi­ness, im­pacted in par­tic­u­lar by a large num­ber of legacy loss mak­ing stores within the UK es­tate, has re­sulted in an un­sus­tain­able sit­u­a­tion ... mean­ing the group was in clear need of an ap­pro­pri­ate res­o­lu­tion,” said in­terim ex­ec­u­tive chair­man Clive Whi­ley.

An­a­lysts at Peel Hunt said Mother­care’s mea­sures looked suf­fi­cient to get the UK busi­ness back to breakeven.

Photo: Conor McCabe Pho­tog­ra­phy

David Tighe, head of En­ter­prise & In­no­va­tion at Bank of Ire­land; Áine McCleary, di­rec­tor of Dis­tri­bu­tion Channels at Bank of Ire­land, and the pres­i­dent of the In­sti­tute of Bank­ing; and Ann O’Dea, founder of In­spirefest, at the of­fi­cial launch of In­spirefest 2018 in the Bank of Ire­land Work­bench, Grand Canal Square. The event is an in­ter­na­tional fes­ti­val of tech­nol­ogy, science, de­sign and the arts.

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