(Alliance News) - Mothercare PLC on Monday said it is making "significant progress" with its transformation plan as the mother and baby products retailer shifts to an international franchise model.
However, the struggling retailer said it is seeking a new chief executive following the interim CEO's decision to step down on June 30.
Glyn Hughes was hired as interim CEO in January after the retailer put its UK stores into administration last year. The company said it is now at the shortlist stage of the recruitment process, adding that pending the arrival of a new CEO, the business will be run by Chief Financial Officer Andrew Cook with close oversight from Chair Clive Whiley.
Mothercare said that in line with plans to recapitalise the business with the minimum possible further dilution for shareholders, it remains in discussions with a number of prospective new debt providers regarding entering into new facilities.
As at June 19, the total secured debt - including drawings on the retailer's GBP24 million revolving credit facility, other guarantees and letters of credit - was GBP18 million, and these liabilities remain secured over the group as a whole. The company said it understands that there remains a further amount to be paid out from the administrators of Mothercare UK which is expected to reduce this secured debt further.
Turning to current trading, the company said around two-thirds of its global retail locations are now open following the relaxation of government-enforced lockdowns resulting from the Covid-19 pandemic. It said it is currently in discussions with its existing franchise partners to establish a less capital-intensive business going forward with effect from the autumn/winter 2020 season. It also added that it is working to finalise arrangements to make Boots its UK franchise partner.
In December, Mothercare agreed a deal for Boots to become its exclusive franchisee in the UK and sell Mothercare-branded products across its stores.
As part of its transformation, Mothercare said it has agreed to sub-lease a substantial part of its main Daventry warehouse to a third party for four months, thereby reducing costs by around GBP220,000 per month. The company will also move to "a smaller and more cost-effective" head office in Weybridge, Surrey in early August, with the move expected to reduce cash occupancy costs for its head office by around GBP900,000 each year.
"We continue to take action to reduce our cost base and address legacy issues, helping with our return to being a profitable and sustainable business. I would like to thank Glyn Hughes both personally and on behalf of the board. Glyn has, initially as CFO and latterly as interim CEO, been instrumental in driving much of the significant financial and strategic change in the group over his time at Mothercare. We wish him well with his future endeavours," said Whiley.
Mothercare stock was trading 7.8% lower at 7.38 pence each on Monday afternoon in London, and 58% lower so far in 2020.
By Ife Taiwo; ifetaiwo@alliancenews.com.
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Mothercare (MTC)