Mothercare has warned full-year profit will come in significantly below the previous year, as it continues to feel the impact of disruption in the Middle East and the end of its UK distribution deal with Boots.
In an unaudited trading update for the year to 28 March 2026, the specialist brand for parents and young children said worldwide retail sales through its franchise partners fell 22 per cent to £180m.
On a constant currency basis, sales were down 19 per cent.
Adjusted EBITDA is expected to come in at around £1.25m, down from £3.5m a year earlier.
Mothercare said the weaker performance reflected a number of pressures, including foreign exchange movements, the end of its exclusive distribution partnership with Boots at the close of 2025, and continued instability in key Middle Eastern markets.
The retailer said the conflict involving Iran in the final month of the financial year alone is expected to have reduced EBITDA by around £0.1m, with disruption continuing into the current year.
Net borrowings stood at £5.7m at the year end, up from £3.7m in March 2025, while the pension scheme deficit remained at £35m at the end of the 2025 calendar year, unchanged from March 2025.
Mothercare has undergone a dramatic transformation in recent years, shifting away from operating its own stores to become a brand-led business focused on franchised retail.
Despite the latest setback, the business said there were signs of resilience in parts of the group.
Excluding the Middle East and the UK, Mothercare said total retail sales were positive on a like-for-like basis over the full year, suggesting the wider business remains more stable than the headline figures imply.
However, those two markets remain highly significant for the brand, leaving questions over how quickly the turnaround can regain momentum.
Chairman Clive Whiley said: “Our results for last year reflect the impact of the continuing uncertainty on our franchise partners’ operations in the Middle East, where any longer-term impact upon supply chains remains unclear at this stage, and the underlying profitability and cash generation of our asset-light franchise system.
“The full refinancing of our debt facilities in February 2026 has bought additional time to engineer a more comprehensive solution to harvest the value of the brand IP and the significant operational gearing available to an expanded business.
“In these circumstances the recent financial performance has been usefully resilient as we look to FY27, whilst acknowledging the impact of the continuing disruption from events in the Middle East.
“Given the external factors influencing some of the company’s key operating markets, our immediate priority remains to support our franchise partners, ultimately for the benefit of our own underlying business, where the strength of the Mothercare brand endures.
“We remain in discussions with several parties to restore critical mass, a process greatly assisted by the recent alignment of the first-charge debt instrument with our equity.”
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