// Mothercare updates again on its transformation plan
// Retailer will downsize head offices and sub-let warehouse space
// Interim CEO Glyn Hughes will depart retailer on June 30
Mothercare has revealed it will move head offices and is in discussions with new debt providers as part of an update on its transformation plan.
The embattled baby care and maternity retailer said it “remain[s] on track to become a profitable international franchise operation”, via what it describes as an “asset-light model” of operations in around 40 international territories.
Mothercare said it had completed its transition to refocus its group on “core competencies of brand management and the design, development and sourcing of product to help grow the Mothercare business with its global franchise partners”.
The retailer added it was still in discussions with new debt providers to engage in new facilities for its recapitalisation.
As of June 19, Mothercare had a total secured debt of £24 million in a revolving credit facility, with other guarantees and letter of credit amounting to £18 million.
The group went into administration in November 2019, resulting in 2500 job losses and 79 store closures.
“As we have noted previously, the experience we gained at the time of the administration of Mothercare UK last November, is proving invaluable in helping us – with the support of our franchise and our manufacturing partners – to manage and mitigate the overall impact on both our and their businesses,” Mothercare said in a statement.
“We currently estimate that approximately two thirds of our partners’ global retail locations are now open following local guidance in their respective territories.”
Mothercare has since announced that its UK franchise deal with Boots has been delayed due to the coronavirus pandemic.
“Constructive discussions are ongoing with our existing franchise partners (to establish a more sustainable and less capital-intensive business going forward with effect from the A/W20 season) and with Boots (to finalise the contractual arrangements for their appointment as our UK franchise partner as contemplated by the binding heads of terms signed in December 2019),” it said.
As part of its transformation, Mothercare said it agreed to sub-lease a substantial part of its main Daventry warehouse to a third party for a short-term.
The business will also move to “a smaller and more cost-effective” head office in early August 2020, surrendering the existing lease of the current company head quarters in Watford in mid-July.
“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,” Mothercare chairman Clive Whiley said.
“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.”
Mothercare added that it is now shortlisting candidates for a permanent chief executive, after interim chief executive Glyn Hughes ruled himself out of the search.
“I would like to thank Glyn Hughes both personally and on behalf of the board,” Whiley said.
“Glyn has, initially as CFO and latterly as interim CEO, been instrumental in driving much of the significant financial and strategic change in the group over his time at Mothercare.”
Glyn will depart from the retailer on June 30.