(Alliance News) - Mothercare PLC on Thursday posted a sharp first-half earnings fall but reported progress from its turnaround plan with its restructuring "now all but complete".
The seller of products for expectant mothers and infants saw its UK arm sink into administration a year ago. Like many in the UK retail space, Mothercare was faced with poor consumer confidence, low levels and footfall and since the Spring, the Covid-19 pandemic and resultant lockdowns.
In the 28 weeks to October 10, Mothercare's revenue fell 57% year-on-year to GBP44.4 million from GBP102.0 million. Worldwide sales - so including those at its franchise partners - was down 42% annually at GBP189.2 million from GBP328.4 million.
From its continuing operations, Mothercare swung to a pretax loss of GBP14.1 million from a GBP5.7 million profit. However, the company noted that its total group loss trimmed to GBP14.1 million from GBP19.2 million a year earlier.
"In March this year we successfully emerged from the transaction and execution risks associated with the administration of Mothercare UK Ltd and the restructuring of the business which commenced in November 2019. This necessary and unavoidable step preserved value, most notably for our pension fund, our global franchise operations and lending group - who would have otherwise faced significant losses," the company said.
"Unfortunately, immediately thereafter the circumstances surrounding Covid-19 introduced an unprecedented demand shock, which led to a low point in April 2020 of only 27% of our franchise partners' global retail locations being open. Whilst substantially recovering since then this still equates to an aggregate current year loss of retail sales to our franchise partners of approximately GBP145 million, compared to the same period last year."
Updating on the "final elements to its transformation plan", Mothercare said it has secured a GBP19.5 million loan from Gordon Brothers Brands LLC, with proceeds used to repay outstanding funds from a revolving credit facility.
It has also landed agreements with holders of its GBP13.5 million convertible unsecured loans issued in 2018 and 2019 to convert these into equity at the end of January. This is contingent on the company relisting onto AIM, however.
AIM is a "more appropriate" market for Mothercare and its listing there is expected to be effective from the first-quarter of 2021.
"The restructuring phase of Mothercare is now all but complete. 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," Chair Clive Whiley said.
Mothercare shares were 5.0% higher at 13.20 pence each in London shortly before midday on Thursday.
By Eric Cunha; ericcunha@alliancenews.com
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Mothercare (MTC)