Mothercare is to reappoint its sacked CEO Mark Newton-Jones as it prepares to shutter 50 of its 137 UK stores.
The chief executive was removed from his post in April this year after poor Christmas trading and a profits warning. He was replaced after four years in charge of the baby goods retailer.
It is reported that Mothercare is putting together a rescue deal and earlier this week said that it was ‘finalising a comprehensive restructuring and refinancing package to put the business on a stable and sustainable financial footing.’
Full details are expected to be revealed along with its full-year results statement, but the reorganisation is likely to involve a CVA. Typically this sees retailers closing stores and renegotiating rents.
Over the past four years Mothercare has closed dozens of stores, taking its total from 200 outlets to 137 last year. It now inteds to reduce that by a further 80 to 100 stores.
“Even if this CVA is approved, the company’s future is not assured, given greater issues in its business than an overambitious store estate: namely its inability to entice younger parents to its stores, something that value retailer Primark has been extremely successful at,” said Zoe Mills, retail analyst at the data and analytics company, GlobalData.
Once a household name in the babycare and baby equipment market, Mothercare has started to lose market share to the grocers and the rising dominance of online players.
“While Mothercare was slow to move online its website now drives almost half of its sales, though as it acknowledged in today’s announcement, it requires further investment, and this rather than stores, is where it plans to spend the bulk of the cash it hopes to raise,” continued Mills.
“However, its remaining stores also need a lot of attention, and effort is needed to make them more engaging, creating a sense of community through classes and events among its shoppers to ensure loyalty and repeat purchases.”