Shares in Mothercare remained down by more than 4% this morning (5 March) following the news the UK mother, baby and children’s goods retailer may breach its lending agreements and expects full-year profits to be at the lower end of its guidance.
In response to what it called “media speculation”, Mothercare issued a statement on Friday to confirm it is working with its financing partners with respect to its financing needs for FY19 and beyond.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
The group said it expects its borrowings to increase towards the limit of its total committed and non-committed facilities at various points from the start of the new financial year, and will, therefore, require waivers of certain financial covenants.
It added the firm is also exploring “additional sources of financing” in a bid to support and maintain the momentum of its transformation programme. As part of this initiative, Mothercare says it will continue with its planned strategy of reducing the UK store estate whilst increasing digital capabilities.
CEO Mark Newton-Jones said the retail sector continues to face a number of pressures that are clearly having a” profound impact” on the sector as a whole.
He added: “Against this backdrop we are performing in line with our expectations and remain a cash generative business, but we also need to push ahead with our transformation strategy to meet our customers’ needs and continue adapting to evolving shopping habits around the world.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalData“We are working together with all our stakeholders, including colleagues, franchisees, financiers, suppliers and pensions trustees on this next phase of our transformation and their part in delivering these plans. The support already being shown gives us confidence that, despite the challenges, there remains a clear way forward for Mothercare to realise its ambition to be the leading global retailer for parents and young children.”
Meanwhile, since its trading statement of 8 January, the retailer said its trading and financial performance has remained broadly in line with the board’s expectations.
The firm now expects net debt at year-end to be “slightly better” than the GBP50m (US$69.1m) previously guided, while adjusted group profit before tax is forecast to be at the lower end of the previously guided range of GBP1m-5m.
