800 jobs at risk as Mothercare prepares 50 store closures

By

Barbara Santamaria

Published
Jun 4, 2018

Struggling nursery chain Mothercare will slash its 137-strong store estate as it moves forward with its company voluntary agreement, which received the backing of creditors on Friday.

The company plans to axe 50 UK stores, putting 800 jobs at risk of redundancy. And a further 21 of its stores are facing the prospect of a similar future, after it emerged on Monday that a key creditor rejected a part of Mothercare’s CVA plan.

The failure to secure creditors’ backing means that Mothercare’s Children’s World subsidiary will be unable to cut rents, which could lead to around 336 more job losses.

The national retailer employs 3,000 people across 137 locations.

The CVA proposal was partly approved last week as part of a far-reaching rescue package to turn around the business. This also includes a £113.5 million refinancing, and the return of former chief executive Mark Newton-Jones, who was ousted from the company two months ago. Current chief executive David Wood will move to the role of group managing director.

The refinancing will see Mothercare issue new shares to raise around £28 million next month. Its share price fell 5.1% between Friday and Monday following the company's fallout of the blue-chip FTSE 100 index into the lower-ranked FTSE 250.

In May, Mothercare revealed a 1.3% decline in UK like-for-like sales for the year to 24 March, with losses before tax widening to £79.4 million from £9.7 million in the year before. The performance was a result of weak consumer confidence, falling store footfall and rising costs.