Mothercare on the Brink of Bankruptcy
- Retailer issued a profit warning in January and has struggled since
- One of many to struggle with sales recently
- Brand tried to make up for poor sales by offering huge discounts
- In crunch talks with lenders now
Retailer Mothercare has revealed that it has entered into vital crunch talks with its lenders, after warning that profits are disappearing.
The company previously issued a profit warning in January, after it was one of many stores to be hit by poor Christmas sales, and has said that profits have been far lower than expected.
Mothercare is now working with its lenders as it seeks waivers from some financial commitments.
A spokesperson for Mothercare said, “Reflecting the more challenging trading environment and our seasonal cash flows, we are working with our financing partners with respect to our financing needs for 2019 and beyond.
“We forecast our borrowings to increase towards the limit of our total committed and uncommitted facilities at various points form the start of the new financial year, and will therefore require waivers of certain financial covenants.”
Mothercare has been working to slim down the total number of UK stores to between 80 and 100, down from the current 143, and has already shut down several locations as part of this plan.
The announcement from Mothercare comes after Toys R Us and Maplin announced they had collapsed into administration on Wednesday, affecting over 5,000 jobs.
Similarly, Prezzo and New Look are also being forced to shut stores through agreements in order to cut costs and try and improve profits.
Retailers across the country have been suffering from weak consumer confidence off the back of inflation, although this has risen slightly in January.
Mark Newton-Jones, Mothercare’s Chief Executive, said, “The retail sector continues to face a number of pressures that are clearly having a profound impact on the sector as a whole.
“Against this backdrop we are performing in line with are expectations and remain a cash generative business, but we also need to push ahead with out transformation strategy to meet our customers’ needs and continue adapting to evolving shopping habits.”
Mothercare has tried to make up for losses by putting on huge sales, which have been popular with members of the Latest Deals bargain hunting community.
Michelle said, “I recently used Mothercare’s sale to sort out our nursery bits.
“I got a full cot set up, mattress, top changer, and drawer underneath for £200 - a great bargain!
“It’s all really good quality, but I wouldn’t buy from there unless it was in the sale.”
Do you still shop at Mothercare? Let us know in the comments!