// Mothercare left with £10m deficit after failing to accumulate enough cash from clearance sales
// Mothercare had planned to use proceeds made from liquidating stock to pay down the £24.5m in net debt
// The company said the cash raised had come in “behind expectations”
Mothercare has been left with a £10 million debt shortfall after funds raised from clearance sales were “behind expectations”.
The retailer closed down its 79 stores in the UK following a decision last November to put the UK unit into administration.
A total of 2500 staff have lost their jobs as a result of the administration.
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The international businesses are still trading, with plans to become a franchise operation trading from 1000 stores in about 40 countries worldwide.
Mothercare had planned to use the proceeds made from liquidating stock to pay down the £24.5 million in net debt recorded on its balance sheet as of October 2019.
However, due to heavy discounting, Mothercare said the cash raised had come in “behind expectations” and it would be left with a £10 million shortfall.
“Our plans for the final steps of the recapitalisation of the group are in hand and whilst the cash realisation from the Mothercare UK administration was lower than anticipated, the progress that we have made elsewhere means that the financing requirement overall is unchanged from our original plans,” Mothercare chairman Clive Whiley said.
Last week, Mothercare announced that its chief executive Mark Newton-Jones would be stepping down to be replaced by chief financial officer Glyn Hughes on an interim basis.
The retailer has also entered a franchise agreement with Boots to stock its products in store and online from this summer.
The exclusive deal with Boots secures Mothercare’s future in the UK for five years.
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