About to go bust21 Mar 2018 12:05
There is almost no way Mothercare going to last much longer without outside assistance.
Looking at its financials over 25 years, Mothercare was once a BIG COMPANY with a valuation of over �2bn!
After 25 years of slow and steady declines, along with false starts, the end is nigh.
For those who think a buyer would step in, there is a 3% chance (you could not underestimate stupidity!).
That�s because past and current management has made PROMISE AFTER PROMISE they would turned the company. All strategies have failed!
The telling signs were back in 2014 when it did a Rights Issue for �95m at �1.25 per share, a discount of 34% to the current share back then. Now, those shareholders have left the building.
The Telling Signs
Smart investors would have gotten out of Mothercare a long time ago, there were telling signs that the company doesn�t have any a lot of competitive advantages.
One chart speaks for itself, Mothercare�s free cash flow. Before the financial crisis, it was generating �6m per year. After the crisis, it is burning �10m per year in free cash outflow since 2009. http://bit.ly/2FPxqPD
Now, the current cash burn is over �20m-�25m per year and likely to be higher, if they continue to waste money on capex.