Having delayed announcing results due to ‘complexity’, the retailer revealed widening annual losses of £87m.
After a year of restructuring and introducing measures to turn around the business, reported losses grew to £87.3m in the last financial year. Sales fell 7.9% to £1.07b from £1.16b the previous year following reduced consumer confidence after the restructuring. Total loss before tax grew 19.9% to £87.3m from £72.8m the previous year, and net debt fell 84.4% to £6.9m.
A “fracture in the relationship” with the non-executive directors and directors further compounded the issues faced.
The retailer said it had completed its UK store closure programme following a company voluntary arrangement with its creditors, shrinking its estate to 79 stores from 134 the previous year, representing a 30% reduction in space and a reduction in rent costs.
The last year saw the sale of the Early Learning Centre to The Entertainer for £11.5m and the sale and leaseback of the Watford head office for £14.5m as the company moved to reduce its debt.
The results include a contingency in the event of a worst-case scenario; further falls in sales and margins, which would involve the company renegotiating its debt. Chairman Clive Whiley stated: “We remain determined to differentiate Mothercare as a textbook recovery case, in parallel demonstrating that boards can and should foster a greater alignment between their debt and equity providers.”
Chief executive Mark Newton-Jones commented: “Whilst this major restructuring activity has resulted in significant headline losses for the year, the business is now on a sounder financial footing. The next phase of our strategic transformation plan is to develop Mothercare as a global brand, maximising the opportunities we see across many international markets.”
The company said that its primary focus in the UK will now include the development of its online proposition and the introduction of enhanced credit options. Further rebuilding strategies include developing more exclusivity in product and reinforcing the brand’s specialist and service credentials.
Mark continued: “In the early stages of this financial year, we are seeing some improving UK trends as we continue to rebuild to be the specialist retailer for parents and young children.”