Total group revenues tumbled 56.5% to GBP44.4m for the 28 weeks to 10 October from GBP102m last year

Total group revenues tumbled 56.5% to GBP44.4m for the 28 weeks to 10 October from GBP102m last year

UK mother and baby goods retailer Mothercare has secured a GBP19.5m (US$26m) loan in order to repay its debts on the back of its half-year results in which it booked a loss resulting from lower sales and higher costs.

For the 28 weeks ending 10 October, total group loss amounted to GBP14.1m, compared to a loss of GBP19.2m a year earlier. Group adjusted loss before taxation was GBP4.4m, compared to an adjusted profit before tax of GBP4m last time. 

Total group revenues, meanwhile, tumbled 56.5% to GBP44.4m from GBP102m, while worldwide sales stood at GBP189.2m, down from GBP328.4m last time.

Meanwhile, Mothercare has secured a new GBP19.5m loan with Gordon Brothers Brands LLC and says proceeds will be used to repay outstanding amounts due under the group's revolving credit facility.

"The restructuring phase of Mothercare is now all but complete," said chairman Clive Whiley. "The singular focus of the business is to return Mothercare to its rightful place as the leading global brand for parents and young children and to deliver the operational and financial performance commensurate with that leading position. 

"We have diligently managed our way through this period of global crisis, and we emerge in better shape than we went into it. We have refinanced the business alongside commencing our new arrangements with Boots for the UK and Ireland and we are now operating our innovative, working capital light arrangements with our manufacturing and franchise partners around the globe for the autumn/winter 2020 collections. With these foundations in place, Mothercare can move forward again with confidence as a profitable and cash generative international franchise business both in store and online, generating revenues through an asset-light model in the UK and some 40 international territories."

Greg Lawless, analyst at ShoreCapital, notes: "The group has created the context for it to become more in control of its own destiny, with management now tasked to design, procure and have delivered the products it chooses for its franchise partners in the hope that they will be in tune with the new parents and grandparents of the future. That management will be doing so, however, with a more stable financial constitution, in the knowledge that the right assortment will lead to a strong conversion of revenues into EBITDA and so free cash flow generation in time.

"Indeed, with the capital-light model, Mothercare can look to the prospect of high returns and whilst noting the ongoing commitment to fund the pension schemes through this decade, much of that free cash flow should be able to be returned to its shareholders in the form of
dividends and/or share buy-backs.

"We see a progressively brighter future for Mothercare with much less downside risk and the prospect of notable upside to come."