Mothercare has revealed it will be forced to shut 60 stores in a bid to stay afloat, 10 more closures than previously announced, as the group’s chief executive said a quick transformation was needed amid a “brutal” retail landscape.
The company said on Monday that the company voluntary arrangements it agreed with creditors are now effective, and completion of the agreements, as well as the administration of its Childrens World operation, will “result in the exit from 60 UK stores”. The number of jobs at risk has also risen, from 800 to 900.
This will leave Mothercare with 77 stores by June 2019, with 19 of those shops paying reduced rent.
The group also said it plans to raise £32.5m through a share placing, which will be used to fund the restructuring.
Mothercare chief executive Mark Newton-Jones told the BBC that the company had been struggling for the last 10 years.
“In terms of reinventing and transforming the business, the UK had lacked investment so for the best part of a decade the business hadn’t even had a lick of paint in the UK so it was really left behind and hadn’t modernised as a retailer,” he said.
“What we set out to do three and a half, four years ago is to invest and to modernise.
“The shareholders supported us then, they’re supporting us again now and we’ll really be able to speed up the transformation and by God, we do need to speed up the transformation because the UK retail landscape is pretty brutal at the moment.”
Clive Whiley, Mothercare’s interim executive chairman, said: “When I joined the business just three months ago, Mothercare faced a bleak future with growing and pressing financial stresses upon the business.
“We have worked tirelessly as a team to get to where we are today and this fully underwritten equity issue marks the end of this initial phase, returning the group to financial stability. This could not have happened without the support of all of our stakeholders for which we are very grateful.”
He added: “The last three months of hard work and progress have put in place the foundations to get Mothercare back to where it should be as a fit for purpose business with a stronger and more efficient structure both for our UK business and our International franchisees.”
Shares in Mothercare dropped almost 9 per cent in early trading on Monday.