800 jobs at risk as Mothercare prepares to axe 50 stores
PUBLISHED: 09:09 17 May 2018 | UPDATED: 09:09 17 May 2018
Struggling children’s retailer Mothercare has unveiled plans to axe 50 stores across the UK with 800 jobs at risk.
The company, which has stores in Norwich, Ipswich, Clacton-on-Sea, Chelmsford and King’s Lynn, has refused to name specific stores until staff have been informed and said it had no alternative but to restructure.
The closures, which will result in hundreds of job losses, will be carried out through a company voluntary arrangement (CVA) – a move which allows companies to close loss-making shops and secure rental discounts.
Mothercare employs about 3,000 people across 137 outlets.
In a move that will stun many observers, Mark Newton Jones, who was given the elbow as chief executive last month, will return to the fold and once again take the top job.
The man that had been brought in to replace him, David Wood, will now become managing director.
As part of the restructuring, Mothercare also announced a refinancing package worth up to £113.5m.
It comprises £28m through an equity capital raising, an extension of its existing debt to £67.5m, £18m in shareholder and trade partner loans.
Chairman Clive Whiley said: “The recent financial performance of the business, impacted in particular by a large number of legacy loss-making stores within the UK estate, has resulted in an unsustainable situation for the Mothercare brand, meaning the group was in clear need of an appropriate resolution.
“These comprehensive measures provide a renewed and stable financial structure for the business and will drive a step change in Mothercare’s transformation.
“These measures provide a solid platform from which to reposition the group and begin to focus on growth, both in the UK and internationally.”
Retailers across the board have been battered by weak consumer confidence off the back of soaring Brexit-fuelled inflation.
They have also had to contend with surging wage costs and eye-watering business rate hikes.
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