Mothercare restructures by closing down 50 stores
Mothercare is to close 50 underperforming stores. The company, founded in 1961, is also rehiring the chief executive it sacked just weeks ago as part of the wide-ranging shake-up.
The closures, which will result in hundreds of job losses, will be carried out through a company voluntary arrangement (CVA) – a move which allows companies to close loss-making shops and secure rental discounts.
Mothercare employs about 3,000 people across 137 outlets.
The Mothercare store in Cardiff’s St David’s Centre closed at the beginning of 2017 in what was then described as “part of a larger transformation plan for our business to reconfigure our store estate and provide a truly omnichannel shopping experience for our customers”.
In the summer the retailer, which specialises in baby, toddler and maternity products, opened a new store in Swansea.
The Mothercare outlet was the first of the new-look stores to open at Swansea’s Parc Tawe, which was part of a £15m retail park revamp.
The stores and the staff affected are not expected to know until June. After the closures the retail chain will have less than 80 stores nationwide.
In a move that will stun many observers, Mark Newton Jones, who was sacked as chief executive last month, will return to the fold and once again take the top job.
The man that had been brought in to replace him, David Wood, will now become managing director.
As part of the restructuring, Mothercare also announced a refinancing package worth up to £113.5m.
It comprises £28m through an equity capital raising, an extension of its existing debt to £67.5m, and £18m in shareholder and trade partner loans.
Chairman Clive Whiley said: “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 for the Mothercare brand, meaning the group was in clear need of an appropriate resolution.
“These comprehensive measures provide a renewed and stable financial structure for the business and will drive a step-change in Mothercare’s transformation.
“These measures provide a solid platform from which to reposition the group and begin to focus on growth, both in the UK and internationally.”
Retailers across the board have been battered by weak consumer confidence off the back of soaring Brexit-fuelled inflation.
They have also had to contend with surging wage costs and eyewatering business rate hikes.
Since January, Toys R Us and Maplin have filed for administration, while fashion retailers such as New Look and Select have embarked on a series of radical store closure programmes.