In the pre-close trading update for FY25 Mothercare also identified that some impact from the UK market contributed to the downturn due to the termination of its exclusive distribution agreement with Boots at the close of 2025.
In the year ending 29 March 2025 (FY25), Mothercare said its earnings before interest, taxes, depreciation, and amortisation (EBITDA) to be around £3.5m “in line with market expectations”. This projection is a significant drop from the £6.9m adjusted EBITDA reported for the period ending March 2024.
The company again attributed this decline largely to the ongoing instability in the Middle East affecting franchise partner operations, which led to a reduction of Mothercare store count by 47, totalling 77 stores by March 2025.
Mothercare 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. However, the de-leveraged business resulting from the recent India joint venture and refinancing, together with the ongoing support of our lender and pension trustees, is enabling us to continue to explore the full bandwidth of growth opportunities through connections with other businesses, the development of our branded product ranges and licensing within and beyond our existing perimeters.”
Despite these challenges, Mothercare observed that excluding the UK market, retail sales on a like-for-like basis remained positive throughout the fiscal year to March 2025. This resilience occurred amidst widespread economic uncertainties.
The company also noted that its franchise partners are still working through excess inventory resulting from reduced demand during the pandemic. While some territories are concluding this process, it is anticipated that these factors will continue to affect group results in FY26.
Mothercare ended the year with £4.4m in cash, down from £5.0m in March 2024, and had fully drawn upon its revised loan facility of £8.0m.
Current retail sales levels, especially in Middle Eastern markets, necessitate waivers for covenant tests, according to board forecasts. The company said it maintains regular and constructive discussions with its lender regarding these forecasts.
Whiley added: “Given the factors influencing some of the company’s operating markets, our immediate priority remains to support our franchise partners, ultimately for the benefit of our own business. In that context we remain in discussions with several parties to restore critical mass alongside delivering our remaining core objectives. The underlying business has continually proved its resilience and the strength of the brand is evident from the interest it generates and the resultant discussions with potential strategic partners we are having.”
