Mothercare eyes new funding as interim boss stands down

The embattled retailer, which appointed administrators for its UK business in early November 2019, said that it “remained in discussions with a number of prospective new debt providers” about refinancing the business.

The group has been trying to leverage new finances all year, having raised £8.7m from investors and agreed £20m worth of new equity with Numis in January.

Refinancing talks may be hamstrung, however, by the news that interim chief executive Glyn Hughes has stepped away from the business.

Hughes replaced former chief executive Mark Newton-Jones in January, but “ruled himself out of the search” for a permanent replacement.

Mothercare said it was “making good progress” in the search for a permanent chief executive and confirmed that the day-to-day running of the business would now be overseen by the chief operating and chief financial officers.

In a wide-ranging note to the City published this morning, Mothercare also confirmed that it had agreed a short-term sub-lease on its Daventry warehouse, which it said would save it around £220,000 a month.

The retailer said it had agreed to surrender the lease on its current Watford head offices by mid-July, which would again reduce costs by some £900,000 a year.

The group also said that its ambition to “become a profitable international franchise operation” was “on track”.

Mothercare chair Clive Whiley said: “I would like to thank our colleagues, franchise partners, manufacturing partners, lenders and all stakeholders for their continued support in these most extraordinary of times.

“As a result of their support, we remain on track with the plans we set out at the end of March. We are finalising our arrangements with both our existing franchise partners and Boots as our new UK franchise partner, and will make further announcements in due course. Our discussions with various other financing partners also continue constructively.

“We have carefully managed our business over the past three months, to mitigate the impact of the Covid-19 pandemic on our cash flows and liquidity during this period of global crisis, which is reflected in our unchanged bank debt position since March.

“Whilst we have not been immune to temporary store closures in almost all of our territories over the period, I am pleased that we are seeing the reopening of our partners’ stores. At the same time, we continue to take action to reduce our cost base and address legacy issues, helping with our return to being a profitable and sustainable business.

“Finally, I would like to thank Glyn Hughes, both personally and on behalf of the board. Glyn has, initially as CFO and latterly as interim chief executive, been instrumental in driving much of the significant financial and strategic change in the group over his time at Mothercare. We wish him well with his future endeavours.”