Mothercare raises GBP95m through rights issue
Mothercare received acceptance for around 94.6% of its recent rights issue
Struggling mother and baby products retailer Mothercare has raised around GBP95m (US$153m) from its rights issue, which it hopes will help turn the fortunes of the company's UK operations around.
The retailer received acceptance for around 94.6% of its recent rights issue, to help fund a transformation plan.
The company, which has nearly 1,500 Mothercare and Early Learning Centre (ELC) stores in 60 countries, announced the issue last month to enable it to deliver on its new strategic plan for the UK business. This would, in turn, help underpin the future growth potential of its international operations, it said.
Shareholders had approved the GBP100m rights issue last month, which represented a 9-for-10 offer at 125 pence per share. The company's shares closed at 1,790 pence on Friday.
Of the 79.94m shares from the rights issue, over 75.6m were taken up.
Cantor Fitzgerald analyst Mike Dennis noted that with only 94.6% of the 79.942m rights issue placed, the shares will again come under pressure.
He added that Cantor remains sellers of the shares for several reasons.
"Previous capital investment of GBP151m net of landlord contributions in the last eight years has not produced any real returns and more recently has significantly destroyed value in the UK. Sales densities remain very low in the UK. We believe the 50-75 store closures could cost a lot more than the guided GBP25m ... Mothercare's market share of children's clothing and home/travel products has declined by 3.3% to 8.7% in the last four years due to better quality and value high street brands and on-line offers ... and international sales and margins could slow as export prices of Mothercare product become less competitive in local markets due to stronger sterling."
- Under Armour Lighthouse will disrupt production
- Will new Vietnam wage hinder competitiveness?
- How TAL Apparel is staying ahead of the game
- Ethiopia violence undermines sourcing strategies
- Digitisation to drive new apparel-making models
- Marks & Spencer top for modern slavery reporting
- Bangladesh garment workers rally for higher wages
- MAS Holdings shares commitment to sustainability
- H&M CEO named sustainability leader
- Gap to shutter all UK Banana Republic stores
- Africa-Med strategic sourcing review – comparing East Africa, North Africa and Turkey
- REPORT BUNDLE: Africa-Med, Southeast Asia and Central America strategic sourcing pack
- Southeast Asia strategic sourcing review – a focus on Cambodia, Vietnam and Myanmar
- Apparel (GLOBAL) - Industry Report
- Global Sports and Fitness Wear Market 2016-2020